SPH forecast up as job ads surge (ST)

BackFeb 05, 2010

THE recovering economy has prompted companies to start hiring in earnest again, going by the rising number of job advertisements in newspapers.

They surged 47 per cent in December and last month compared with the same months a year ago - a healthy sign for newspaper group Singapore Press Holdings (SPH), said Credit Suisse, which has raised its earnings forecast for SPH on the strength of the ad numbers.

The jump in job ads raised the total number of classified ads by 12 per cent in the same period. This was a dramatic turnaround from the September to November period, when the number of ads dropped 6 per cent from a year ago, said Credit Suisse analyst Sean Quek in a report this week.

More companies are also taking out display ads, which are larger ads that include pictures and are displayed more prominently.

The number of such ads rose by 10 per cent in December and last month compared to the same period a year ago, and up from the 2 per cent rise in the September to November period.

Seasonal effects are one factor driving the sharp pickup. Chinese New Year fell in January last year, which would have depressed the number of job ads then compared with January this year.

But the double-digit rise in ad demand is 'in line with the healthy pickup in the Singapore economy', said Mr Quek. He added that it reflects robust hiring by the new integrated resorts, which have started to open in phases.

However, SPH executive vice-president of Cats Classified Elsie Chua told The Straits Times that the recovery in job ads goes beyond the IRs. The rebound is 'broad-based, cutting across every sector in the economy'.

Mr Quek believes SPH's revenue from classified ads will grow 1.3 per cent for the current financial year, which ends in August, while revenue from display ads will rise 4 per cent.

He said the stock has 'started to outperform again' after SPH disappointed with its 'aggressive bid' for Clementi Mall in November last year. The group won the tender for the mall with an offer of $541.9 million, more than 40 per cent higher than the next-highest bid of $382 million.

In the month after that, SPH shares fell as much as 33 cents, but have since rallied. The counter closed at $3.76 yesterday.

But SPH is still trading at a 'substantial' discount to the market, said Mr Quek, who has a new target price of $4.67 for the share.