Hot stock: SPH up as much as 8% in morning trade as investors price in review

SHARES of mainboard-listed Singapore Press Holdings (SPH) rose by as much as eight per cent, or S$0.12, in early morning trade to hit an intra-day high of S$1.62 on Wednesday at 9.04 am.

As at 2.09 pm the stock was trading at S$1.57, and 57.6 million shares with a value of over S$90 million had changed hands. No married deals were recorded, according to Shareinvestor's data.

SPH shares eventually closed on Wednesday with a more sedate gain of S$0.03 or 2 per cent, at S$1.53. Some 69.2 million shares changed hands, making it the fourth most-traded stock that day.

The price movement came after SPH, which publishes The Business Times, released its financial statement for the half year ended February 28, 2021 and announced it will "consider options for its various businesses".

SPH on Tuesday reported a S$97.9 million net profit for H1 FY2021, up 26.1 per cent from the same period one year ago. Its operating profit increased 16.6 per cent to S$119.8 million.

This came despite a 4.2 per cent fall in revenue to S$460.3 million due to a decline in operating revenue from its media business.

UOB Kay Hian (UOBKH), which has a "buy" call on SPH, on Wednesday raised its target price to S$1.85 from S$1.74 previously.

The brokerage had upgraded SPH to a "buy" on Tuesday while raising its target price from S$1.22, citing "improved prospects" for the group's property assets.

Following the release of the results, UOBKH has raised its earnings estimates for the current and next two financial years by between 11 and 13 per cent. This is to factor in "better contribution" from the group's retail properties, as well as lower costs at the media business.

CGS-CIMB, meanwhile, upgraded SPH to an "add" from a "hold" call. It also raised its target price to S$2.09 from S$1.31 in a Wednesday report.

Analyst Eing Kar Mei said SPH's H1 core net profit of S$85 million had exceeded consensus estimates, and the stock is "undervalued".

Ms Eing, too, raised her earnings forecasts - by between 36 and 60 per cent for the current and next financial year - on lower operating costs, higher revenue from malls and higher investment income.

DBS Group Research, however, said the core operating profit of S$121 million was "below our expectations".

The research house maintained a "hold" on SPH in a report released on Wednesday, with a target of S$1.35.

It said the latest release "does not look good" as the media business booked close to S$10 million of core losses, with advertising expenditure continuing to decline, while the "increase in property revenue was largely due to acquisitions".

DBS Group Research also noted there are some limitations to what SPH can do with the media business, given the Newspaper and Printing Presses Act requires government approval for substantial ownership changes. "Parts of the business may therefore continue to be sold or downsized," it said.