BUY: ING Financial Markets - Mar 09, 2004 (BT)

BackMar 09, 2004

Brokers' Take

BUY: ING Financial Markets

Mar 09, 2004
The Business Times


ING Financial Markets, March 5

FOLLOWING a conversation with the company, we reiterate our BUY call on SPH. Our target price, based on RNAV, is $25.50. The positive page-count growth seen in February - for the first time in a very long while - is not a one-off.

Typically, the post-Chinese New Year period is slow, as seen in the past two years. However, last month saw a turnaround on the back of stronger consumer sentiment. The Sars period started in March 2003, and so we should see the positive trend accelerating further, but it must be noted that the jump in February is genuine demand, not a Sars base-effect.

The Paragon continues to do well in terms of rentals, but this is a small part of overall earnings. We do not believe the sale of the Paragon will occur in 1H04. Gaining traction once more, ratings for the Chinese channel was 51 per cent for February.

Newsprint prices are rising, but management reaffirmed guidance that US$450/ton will be achieved this year. The core business of SPH and its leverage into an improving economy is showing through. We estimate 28 per cent earnings growth this year. The stock has been a laggard as the market chases beta plays, but this is showing signs of cooling off, in our view. We believe SPH deserves more attention. We see limited downside and a strong yield (5.3 per cent) and reiterate our BUY rating.