BUY - Citigroup Research - Mar 24, 2007 (ST)

BackMar 24, 2007

Brokers' Take

BUY - Citigroup Research

Mar 24, 2007
The Straits Times


Singapore Press Holdings

Mar 23 close: $4.36

DOMESTIC economy fuelling ad spend: Management agreed that the recovery in domestic consumption and a buoyant job market is underpinning a recovery in ad revenues at SPH. The company noted that the recovery in the housing market is also starting to stir an increase in classifieds for HDB resale flats.

Costs well contained: Even though the job market is tightening and adding pressure on wages, SPH's wage costs remain well contained. In addition, the group noted a softening in newsprint prices, which should help contain costs.

Higher building material costs will have little impact on the margins at Sky@eleven: The group is close to awarding the construction contract for its Sky@eleven project. Management indicated that the rise in material costs should not significantly affect the margins for the project. We forecast a net profit of $404 million from this project.

Paragon benefiting from strong demand for retail and medical suite space: Paragon continues to see the benefit of strong rental reversions with strong demand for both its retail and office space. This should underpin further appreciation in the valuation of the property.

Attractive valuation trading below sum of parts of $5.35: We reiterate our 'buy/low risk' recommendation given an improving earnings profile, attractive valuation and a net yield of 7 per cent for FY 2008.


Compiled by CONRAD TAN