BUY: Citigroup Research - Dec 22, 2006 (BT)

BackDec 22, 2006

Brokers' Take

BUY: Citigroup Research

Singapore Press Holdings Dec 21 close: S$4.16

Dec 22, 2006
The Business Times


Citigroup Research, December 20


November adspend appears buoyant: AC Nielsen's advertising expenditure numbers for the month of November showed that newspaper ad expenditure jumped 10.3 per cent. Excluding Today, the rise was still 9.7 per cent.

Adspend may have risen 6.1 per cent for SPH's 1Q: Although October ad expenditure for newspapers was flat, growth in September and November might have produced a growth of 6.1 per cent for SPH's adspend revenues in its 1Q.

Anecdotal evidence suggests momentum is strong: Increased display advertising from recent property launches and new campaign from retailers (ex-Courts) suggest the momentum for newspaper ad expenditure is improving.

Display ads and classified growth on track: Our forecast of 3 per cent growth in display and 6 per cent growth in classified appears on track for FY07. If the momentum for display ads and classified continues, there would be upside risks to our earnings.

Reiterate 'buy/low risk (1L)' rating: Potential catalysts for re-rating include improved prospects for its core media business and launch of its Times Industrial Building site project. The net yield of 6 per cent also looks attractive. SPH is trading below our sum-of-parts valuation of S$5.15, while the implied value of the core media business is at 15 times FY07E PE.