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Nikkei: “Mighty” SPH’s star fading as advertisers and subscribers moved online

Nikkei Asian Review reported on Wed that the once “mighty” Singapore Press Holdings (SPH) continues to lose advertisers and investors and has now got most of its earnings from property (‘Singapore Press Holdings loses advertisers and investors’, 10 Apr).

“Once a sought-after stock due to its substantial dividend, SPH has seen its star fade as advertisers and subscribers moved online and away from traditional newspapers and magazines,” Nikkei wrote.

On Tues (9 Apr), SPH reported that its net profit for the quarter ended February plunged 25.7% to S$29.7 million, dragged by lower media revenue and fair value losses on investment properties. The result was well below the S$52.95 million consensus estimate of market analysts.

SPH said that the 10.1% decline in media revenue to S$296.2 million in the six months to February was partly due to the shorter festive advertising window between Christmas and Chinese New Year. This year’s festivities began on Feb. 5, while in 2018 they started on Feb. 16.

The interim dividend was also cut. Between 2014 and the latest financial year ended last August, its annual dividend has fallen 38%.

It’s share price has been falling non-stop from more than $4 during 2015 GE days to yesterday’s (11 Apr) closing of S$2.44

“The main draw of SPH has always been its yield. But now, you are able to get other blue chips which offer equivalent yields and better earnings quality,” said a fund manager at Azure Capital. With less dividend given out, investors looking for better yields are moving elsewhere.

Even stock analysts are running away. According to data from Bloomberg, SPH is now covered only by just 6 analysts, down from 17 five years ago.

While the media income accounts for 60% of SPH’s operating revenue, about two-thirds of profit now comes from property, reflecting that profits from media side are being squeezed.

SPH has more than 50 titles under its umbrella, including its flagship Straits Times which is the largest by circulation. It also owns the three Chinese language papers.

To arrest its fall, SPH roped in former SAF Chief of Defence Force LTG (NS) Ng Yat Chung 2 years ago to revitalize its business.

Photo of Ng Yat Chung by Straits Times.

In a bid to diversify its revenue streams, SPH together with another govt-linked company Keppel Corp, recently took over mobile phone operator M1. But so far, its diversification attempts have yielded mixed results.

Looking ahead, SPH said it wants to expand more into aged-care business. Currently, it owns Orange Valley Healthcare, which operates the largest chain of nursing homes for the elderly in Singapore. Last month, Orange Valley got a bad press when one of its Filipino nurses was jailed for punching a 77-year-old resident’s face multiple times.