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Cost-cutting is not the way for SPH to prosper: CEO
SINGAPORE Press Holdings (SPH) cannot rely on cost cutting measures to prosper. Instead, it is focusing on digitising its core media business while actively seeking out cash-yielding property invesments in defensive sectors, said chief executive Ng Yat Chung at the company's annual general meeting on Monday.
"You cannot cost-cut your way to prosperity," Mr Ng told some 438 shareholders who attended the meeting at SPH News Centre. He also shared some of the thinking that went into SPH's recent acquisitions.
One shareholder was concerned that SPH might be "late to the game" with its S$321 million purchase of student accommodation buildings in the UK, mostly in Plymouth and Huddersfield.
Mr Ng said the acquisition, completed in September, was the result of a long deliberation.
"We knew that Brexit was coming and we wanted to find a sector that was defensive, that would still be viable, likely to grow after Brexit," he noted.
"Even after Brexit, to sustain their economy, we expect that education is one of those pillars the British would want to emphasise and grow.
"So the fact that others have gone in should give us comfort that it's a viable sector... In fact because of Brexit, there are deals to be done, people are willing to let go (of their assets), they want to exit."
Another shareholder sought updates on the aged care business. SPH acquired private nursing home operator Orange Valley last year.
Mr Ng said: "For Orange Valley, the market in Singapore is small and the leases we have are not long leases, we will continue to have to renew those leases. So when we talk about growing the aged care space, we are looking beyond Singapore.
"Right now we are working with developers in neighbouring countries. We have the operating expertise, they have the land. We can develop not just nursing homes, but (also) retirement villages... In places like Australia, the retirement village as a lifestyle choice is very much a mature market."
Another shareholder noted that SPH had previously emphasised the events business as a growth area. He asked if this strategy has changed since the events business gets less mention today.
Mr Ng replied: "We continue to grow it but at the end of the day we are not sentimental about our businesses, we take a hard look at the returns. The events space industry has changed. (Performance) for the events space, at least from the trade side, has not been as expected."
Some shareholders suggested that SPH grow its media business by distributing more content overseas and monetising its rich trove of readership data.
Mr Ng said: "In fact, one of the main ideas behind our investments in digitalisation is precisely to help us understand the readers, what they read, how they read, so that we can deliver apps... We'll try to do it as quickly as we can."
He added: "We are improving our coverage of Southeast Asia. In Southeast Asia, not many English language papers have the same standing as The Straits Times. These are opportunities that we are exploring."
Some circulation figures are encouraging, he noted. Chinese news site Zaobao.com is free in China and its monthly unique visitorship is typically above five million.
SPH chairman Lee Boon Yang reiterated that SPH's core media business remains "very profitable", generating S$92.8 million pre-tax profits in the financial year ended Aug 31.
Mr Ng said: "While we want to make money from the media businesses, we also provide a critical public service."
All resolutions were passed swiftly by shareholders at the meeting. SPH shares rose six Singapore cents to S$2.70 on Monday.