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As Q3 earnings jump 64%, SPH plans new growth thrusts

It plans to focus on overseas expansion of aged care business and real estate assets
SPH

Singapore

SINGAPORE Press Holdings (SPH) is looking at overseas opportunities to expand its real estate asset management and aged care businesses, as well as sharpening its digital capabilities even as the decline in its core media business shows signs of slowing down.

SPH's third quarter net profit rose 64.3 per cent year-on-year to S$47.44 million on the back of lower impairment charges, while operating revenue declined 3.8 per cent to S$250.07 million. Operating profit was up nearly 30 per cent to S$44.41 million due to a near 41 per cent drop in impairment of goodwill and intangibles to S$22.33 million, despite revenue from the media business falling 8 per cent to S$167.94 million. Earnings per share for the quarter edged up to 3 Singapore cents, from 2 cents a year ago.

Meanwhile, for the nine months ended May 31, 2018, net profit rose 15.6 per cent year-on-year to S$148.07 million, despite a 4.3 per cent fall in operating revenue to S$742.53 million.

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In a statement, SPH chief executive officer Ng Yat Chung, said: "As we continue to sharpen our media capabilities in the face of digital disruption, we are seeing early signs of a slower decline of our media revenue. At the same time, we are making efforts to diversify, with new growth thrusts. Our new strategy is to focus on the acquisition of cash-yielding real estate assets overseas. We are also preparing the aged care business for overseas expansion."

As part of its push to expand into other asset sectors overseas, a new asset management company, Straits Capitol, has been set up in the United Kingdom, and is actively reviewing a pipeline of deals. In particular, it is eyeing "recession-proof defensive sectors".

Meanwhile, under its aged care vertical, SPH is preparing to grow regionally where the silver market is expanding rapidly. Here in Singapore, the group owns Orange Valley, which is the nation's largest private nursing home operator.

The media and property group also highlighted that its digital-first strategy has been gaining ground, as both digital subscriptions and e-paper readership grew. For 3Q 2018, daily average digital circulation copies was up by 121,000 copies, or 43.5 per cent, to 399,000 from a year ago. Meanwhile, its E-paper is also seeing good readership, it said, with over 37,000 unique readers for The Straits Times; this translates to over 15 per cent of ST's print circulation.

Meanwhile, for the nine-month period, total digital advertising revenue grew at a pace of 10 per cent. The new SMX platform, a data-driven programmatic ad exchange that started operating in May, has been gaining momentum in reaching the Singapore digital population, SPH said.

In the quarter under review, SPH also strengthened its management team for digital transformation, which included new hires.

Ignatius Low, formerly head of media solutions, was appointed chief marketing officer and is tasked with spearheading the group's integrated marketing strategy.

Glen Gary Francis was appointed chief technology officer and Gaurav Sachdeva, chief product officer. Mr Francis is responsible for the technologies and digital capabilities for SPH's businesses, while Mr Sachdeva will help with the development and monetisation of SPH's digital media content and products.

In addition, former head of the digital division, Julian Tan, was re-designated chief of digital business to drive SPH's portfolio of digital investments.

Commenting on the latest property cooling measures that were implemented last Friday, SPH said that the group is still monitoring the potential impact on The Woodleigh Residences, which is part of a commercial cum residential site it is jointly developing with Kajima Development.

In a separate announcement on Wednesday, the group said it is partnering local machine learning startup DC Frontiers to develop a content recommendation engine, driven by artificial intelligence.

The engine will use analysis and algorithms to curate articles for SPH's readers based on individual news consumption habits and other attributes.

SPH has a 25 per cent stake in DC Frontiers, which is known for its award-winning Handshakes product.

The project, part of SPH's ongoing efforts to deepen audience engagement using the latest technologies, will be partially funded by the Infocomm Media Development Authority (IMDA).

Shares in SPH - which owns The Business Times - fell two cents to close at S$2.75 on Wednesday. Its financial results were released after the market closed.

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