Singapore Press Holdings Ltd. is now deemed as the worst performer on the MSCI Singapore Index as its shares stand at a quarter-century low, following its attempt to diversify into real estate did not provide positive results forcing the company to offset sinking earnings from its media business.
The organisation – which is Singapore’s biggest media group – dropped 4.3% this year, as opposed to 12% increase in the 25-member MSCI Singapore Index.
As of 1.37pm on Friday (26 July), the shares of the media company dipped 0.44% more after dropping earlier as much as 1.3% – which brought their shares to the lowest in more than 25 years.
Besides SPH, Genting Singapore Ltd. and Sembcorp Industries Ltd. were other two companies that performed poorly as well.
For those who don’t know, more than half of SPH’s sales are derived from its media business, which has been suffering from digital disruption despite the increase in internet and smartphones users.
In an attempt to curb this problem, Chief Executive Officer Ng Yat Chung began expanding the organisation’s real estate and digital businesses.
Jarick Seet, head of small and mid-cap research at RHB Securities told Bloomberg that the move to broaden the business into real estate is helping, but “the core business is deteriorating at a much faster pace” and “other segments are not able to replace the drop in earnings” in the media business.
Based on a data gathered by Bloomberg, it is said that the net income at Singapore Press is set for a seventh annual decline in eight. In fact, the company’s statement on 12 July stated that the sales from media (including The Straits Times and The Business Times) for the nine-month period which ended 31 May dipped 12% to S$439.7 million from a year ago.
On top of that, the division’s profit before tax also dropped 32% to S$52.1 million.
SPH was once placed higher than the New York Times Co. in terms market capitalisation, but its value has shrunk in the last two years. Adding to the bad news, the company’s shares are also looking at a fifth yearly decline and the firm has lost almost half, which translates to S$3.2 billion, of its market value since the end of 2014.
Due to its poor performance, analysts are not entire happy with the firm’s solutions to grow digital revenues and acquisitions of possible profit-making and income generating real estate assets.
In April 2017, SPH bought a nursing home provider called Orange Valley Healthcare Pte for S$164 million and took a goodwill impairment of S$21.5 million in the third quarter of this year.
“The media business continues to be challenged on various fronts including the ongoing trade tensions and the slowing of the Singapore economy, but we remain focused on our digital transformation strategy,” Ng noted in a statement following the company’s third-quarter results on 12 July.