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SPH down almost 5% on first ever loss



SHARES of Singapore Press Holdings (SPH) sank on Wednesday as the board slashed dividends after the media and property group fell into the red for the first time.

The counter dipped below S$1 to 99.5 Singapore cents minutes after the opening bell. It regained some momentum later in the morning and ended the day at S$1, shedding S$0.05 or 4.8 per cent.

The stock was the fifth most actively traded by volume on the Singapore bourse for the day with about 44 million shares changing hands.

The board on Tuesday declared a final dividend of one Singapore cent per share, versus last year's 5.5 cents, which included a special dividend of one cent. Together with the interim dividend of 1.5 cents, the total dividend payout for FY20 will be 2.5 cents.

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SPH, which publishes The Business Times, posted a net loss of S$83.7 million for the full year ended Aug 31 as it took a hit from non-cash fair-value losses of S$232 million - mostly on its malls and purpose-built student accommodation assets. This reversed its net profit of S$213.2 million a year ago.

The group, however, remains operationally profitable. For the full year, operating profit fell 41 per cent to S$110.2 million.

Meanwhile, operating revenue for the year declined 9.8 per cent to S$865.7 million, while media advertisement revenue fell 31.4 per cent.

Its media business continued to be hurt by weak advertisement revenue. The media segment posted a loss before taxation of S$11.4 million, compared with a profit of S$54.7 million for FY19.

Meanwhile, its property business was boosted by the acquisition of the Westfield Marion mall and the Student Castle PBSA portfolio. But loss before taxation for the property segment stood at S$75.8 million, compared with a profit of S$263 million in FY19, due to the fair-value losses.

Full-year loss per share was S$0.07, compared with earnings per share of S$0.13 in the last financial year. Net asset value per share was S$2.06 as at Aug 31, down from S$2.16 as at Aug 31 last year.

Analysts pointed out that even excluding one-off items such as fair-value loss from investment properties, operating profit would still have been below consensus.

"Excluding the one-off items, pre-tax would have been in positive territory at S$160.3 million, but still falling short of our expectations," wrote DBS analysts Alfie Yeo and Andy Sim in a report on Wednesday.

The proposed final dividend per share was also a letdown, said analysts.

Against this backdrop, analysts on Wednesday maintained their "hold" rating on SPH while lowering their target prices.

Mr Yeo and Mr Sim lowered their target price to S$1.09 from the previous S$1.26 as they expect weakness to persist in the media segment for FY21, dragging overall earnings.

CGS-CIMB analyst Ngoh Yi Sin revised her target price to S$1.10 from the previous S$1.35. She noted that the "hold" rating was retained as "most of the negative news has been largely priced in" at 0.45 time price-to-book value for FY20.

This was despite the earnings miss, limited catalysts in the near-term and higher net gearing of 0.53 time as at end-FY20, she said.

As the group continues to face advertising headwinds, CGS-CIMB expects SPH to remain loss-making in the near term until revenue growth returns.

Likewise, Mr Yeo and Mr Sim noted that the media business will continue to be a drag in the immediate term, given the weak advertisement expenditure outlook. They have therefore lowered their forecasts for earnings in FY21 to FY22 by 7 to 18 per cent after factoring in lower operating margins.

CGS-CIMB also trimmed SPH's FY21 to FY22 earnings per share forecasts by 11.1 to 18.4 per cent to "reflect pressure on media earnings and a more gradual recovery in retail malls".

Still, DBS remains bullish on the group's property business.

"Nonetheless, we see property driving earnings growth in the longer term, contributing to better margins for the group from FY22," Mr Yeo and Mr Sim said.

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