Singapore Press Holdings Limited - MANAGEMENT REPLY: How is it going to revitalise its core business?

23/1/2014 – Singapore Press Holdings says its core print advertising and circulation revenue will continue to move in tandem with economic and market trends, as it reported tepid growth in Q1 2014.

In comments which were almost identical to what it said in the previous quarter, Singapore's biggest publisher said Seletar Mall is on schedule for completion at the end of this year.

Management continues to say it is focused on capital preservation as it continues to evaluate growth opportunities and revitalise its core business.

These are the company's earnings for Q1FY14:

Revenue: +1.7% to S$332 mln
Profit: -6.6% to S$88.8 mln
Cash flow from operations: S$136.5 mln vs S$168 mln
Dividend: None vs None

Revenue rose even though their newspaper and magazines business fell 2.9%, with advertising generating 2.8% less revenue than a year ago, and circulation 4.7%.

That's because property revenue went up 5.4%.

The Paragon and Clementi Mall are fully occupied and are performing steadily.

Revenue from its other businesses which include the events and exhibitions operations, book publishing and distribution, radio and television broadcasting, online classifieds, and New Media Fund, doubled from S$10.4 mln to S$21.8 mln.

Events and exhibitions grew partly because of events being held at different dates in the comparative period.

On the cost side, expense for salaries went up 2.5%.

Salary increments were granted but at the same time bonuses were cut.

As at November 30, 2013, SPH had debt of S$1.75 bln, of which S$2.7 mln is repayable within a year.

Last done share price on January 16 was S$4.03, almost twice its net asset value of S$2.10.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question

1. What is the strategy to revitalise its core business?

And what is the evidence that this is bearing fruit?

Question

2. Does print advertising revenue really track economic growth?

The reason we are asking is that ad revenue keeps falling, even as the economy keeps growing.

In 2013, SPH posted a 4% decline in print advertising in its full year results published on October 11, 2013, even though the Singapore economy grew 3.7% in the calendar year of 2013.

Singapore's economy is forecast to grow 2%-4% in 2014, and in theory print advertising should follow.

Question

3. How is the digital business like ShareInvestor, Chope and SGCarMart doing?

We couldn't find any revenue breakdown about these businesses.

Nor did SPH provide any insight into how they are going.

All we know is that its share of losses from associates was a S$3.5 mln, up from S$2.2 mln last year.

But these figures include MediaCorp Press and MediaCorp TV Holdings, which we assume are strong contributors because MediaCorp reported operating profit of S$25.7 mln in the 2012/13 financial year.

This suggests that the losses at the digital businesses are substantial, and not even MediaCorp's contribution could offset them.

Question

4. Which new opportunities is it evaluating?

And when can we see one which will really bring home the bacon?
(Total number of questions in the full story: 8)

Management Reply:Our SGX detailed announcements would have disclosed all that we are able to on our business performance as a listco. Thanks for your interest and understanding.

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