BUY: DBS Group Research - Aug 22, 2008 (BT)

BackAug 22, 2008

Brokers' Take

BUY: DBS Group Research

Aug 22, 2008
The Business Times


Singapore Press Holdings
Aug 21 close: $4.06
DBS Group Research, Aug 21

STRONG July adex growth: Nielsen Media's latest advertising expenditure (adex) figures show that SPH's newspaper display and classified ad volumes for July 2008 grew by 12.6 per cent y-o-y. For SPH's 11 months to date for FY2008 (September to July), Nielsen Media's estimates indicate that SPH's display and classified volumes have risen by 6.9 per cent y-o-y.

We believe that these figures indicate SPH is right on track to meet our assumption of 7 per cent y-o-y growth in display and classified ad volumes for FY2008, reflecting robust domestic consumption spending in Singapore thus far.

Whilst growth in advertising revenue is expected to slow down, we remain positive on the group's longer-term prospects given its strong position in print advertising, attractive property asset ie The Paragon, and strong balance sheet. All these translate to firm, growing cash flows for SPH, which should help to continue to support the stock's generous dividend payouts.

We expect SPH to report its Q4 and FY2008 results around mid-October, and are projecting the group to propose a final net dividend of 24 cents (interim dividend was eight cents), given continued growth in its core publishing business, higher property rental income and further revenue recognition from the Sky@Eleven residential development.

We continue to like SPH for its attractive valuation and as a defensive stock, backed by a net yield of more than 7.5 per cent (premised on 90 per cent payout of Ebit; in line with last six years), and reiterate our 'buy' call. Our sum-of-the- parts valuation for SPH is $5.75.