SPH shares up on Q1 earnings growth (ST)

BackJan 15, 2010

INVESTORS scrambled to buy shares in Singapore Press Holdings (SPH) yesterday on the back of the media group's impressive first-quarter results.

The counter rose steadily throughout the day on constant investor demand right from the opening bell. It closed at $3.82, up 16 cents, or 4.37 per cent yesterday.

The rally reversed two days of losses. Volume traded hit 16.9 million shares, which is the highest daily volume for the counter since November last year.

SPH announced after the markets had closed on Wednesday that its net profit for the three months to Nov 30 last year almost doubled to $144.7 million, up from $73 million in the corresponding period a year earlier.

This came as recurring income soared and investment returns recovered. Earnings per share for the first quarter rose to nine cents from five cents a year earlier, while net asset value was $1.37 per share as at Nov 30, up from $1.28 as at Aug 31.

Analysts scrambled to raise their calls on the stock on the back of the sterling results. DBS Vickers and OCBC Investment Research upgraded their 'hold' calls to 'buy'. DBS Vickers raised its target price to $4.33 from $4, while OCBC upped the target price to $3.91 from $3.56.

CIMB-GK raised the counter to 'outperform' from 'neutral', and raised its valuation to $4.44 from $4.38.

Credit Suisse maintained its 'outperform' call on the stock, but raised the valuation by 10 cents to $4.51, while Kim Eng maintained its 'buy' call and raised the target price by four cents to $4.47.

'The stock offers an attractive entry point for investors seeking a blend of fairly resilient earnings and exposure to the property sector,' OCBC said in a report.

OCBC added that SPH's core newspaper business is showing signs of improvement as economic conditions pick up, while its property arm is expected to contribute significantly to this financial year's earnings as the Sky@eleven condominium project, with total revenue of $650 million, will be ready this year.

DBS Vickers said the upcoming integrated resorts will boost SPH's earnings: 'We believe the (resort) operators would need to drum up the hype, thereby creating more media-worthy activities.'

JP Morgan was also optimistic about the counter. It upgraded the target price to $3.45 from $3.10 due to a better outlook for SPH's core publishing business, but maintained its 'underweight' rating because it believed operating costs might rise in the future.

DMG Securities was unaffected by the bullish sentiments swirling around as it also expressed concerns about SPH's costs in the future: 'While advertising revenue is expected to rebound in 2010, we expect an increase in the group's operating expenses, in particular, staff cost, which is projected to increase by 6.3 per cent this financial year.'

DMG maintained its 'neutral' call amid a $3.86 target price.

SPH is the largest listed media company in Singapore with 17 newspapers, including The Straits Times.

It also owns more than 100 magazines and popular websites such as AsiaOne and Stomp.