BUY: UOB Kay Hian Research - Feb 12, 2008 (BT)

BackFeb 12, 2008

Brokers' Take

BUY: UOB Kay Hian Research

Feb 12, 2008
The Business Times


Singapore Press Holdings
Feb 11 close: S$4.36
UOB Kay Hian Research, Feb 11

OUR page-counts of The Straits Times suggest an advertising volume growth of 3 per cent and 6 per cent in December 2007 and January 2008 respectively. Advertising revenue growth should also benefit from SPH's ad rate increases in January 2008. Display ad rates for The Straits Times have been raised by 2-2.5 per cent. Display ad rates for The Business Times have been increased by 7.5 per cent, but there have been no adjustments for notices and classifieds. The Sunday Times has seen a 3-4 per cent increase for notices and classifieds.

SPH, with its defensive qualities in times of uncertainty, has made a comeback on investors' radar screen. The company registered a robust 10.2 per cent advertising revenue growth in Q1 FY08. This large-cap stock has turned the corner from its past lacklustre operating performance.

Despite the US economic slowdown, we believe Singapore is in a sweet spot, with economic growth supported by the banking, construction, marine fabrication and tourism sectors.

There are three key positive trends: 1) a robust bank loans growth, driven by strong property sales on deferred payment in the last two years; 2) construction activities from the property sector and the integrated resorts (IRs); 3) rising tourism on commencement of the IRs; and 4) continued marine fabrication boom on the back of high oil prices. Advertising revenue growth will be underpinned by these factors.

SPH's FY08 and FY09 dividend yields are forecast at 7 per cent per annum. Maintain 'buy' and our target price of $5.60.