SPH shares fall after mall bid (BT)

BackNov 12, 2009

SHARES of media group Singapore Press Holdings (SPH) fell as much as 4.9 per cent yesterday before closing 3.9 per cent down on analysts' fears over its strong bid for a mall.

But most analysts were upbeat on the fundamentals of the mall.

On Tuesday, a joint venture comprising SPH (60 per cent), NTUC FairPrice (20 per cent) and NTUC Income (20 per cent) emerged as the top bidder for a mall now being developed by HDB in Clementi.

The consortium's top bid of some $542 million was about 42 per cent higher than the second highest bid of $382 million.

SPH shares closed 15 cents down at $3.74 yesterday.

"Based on our preliminary calculations, we think SPH may have been unnecessarily aggressive in its bid for Clementi Mall," said Citigroup analysts Rigan Wong and Horng Han Low in a note.

DBS Group Research cut its target price for SPH to $4.00 from $4.22, and downgraded the stock to a "hold" from a "buy".

CIMB Research, on the other hand, is maintaining its "neutral" call on SPH and also keeping its target price intact at $4.38.

Also, most analysts were positive about the fundamentals of the mall.

"Notwithstanding the price, we believe the mall is well located within the town centre, connected to a bus interchange/MRT station and has a good catchment area with 91,000 residents and 65,000 students in the vicinity," said DBS Research analyst Andy Sim.

JPMorgan similarly acknowledged the "premium location" of this suburban mall, but qualified that the price offered by the SPH consortium was far too aggressive.