Last week (2 Feb), DBS Group Research issued a report saying Metro’s possible exit from retail scene would affect Singapore Press Holdings (SPH) more.

“Metro is mulling the potential closure of its two existing outlets in Singapore, given the ever-changing retail scene and waning prospects for department stores,” DBS said.

“We understand that there are several years left on the lease at Causeway Point and Paragon, where the department store is an anchor tenant and the group may or may not extend those leases.”

Metro is currently among one of the top 10 tenants by gross rental income (GRI) for SPH REIT at Paragon and Frasers Centrepoint Trust (FCT) at Causeway Point. But at Causeway Point, Metro only incurs less than 1.5% of GRI.

DBS opined that exposure appears to be material for Paragon Mall which is a key asset for SPH REIT, if Metro leaves. “Metro Department store has been at the (Paragon) mall for many years and in our view, occupies a ‘cold corner’ within the mall where there is less traffic. We believe that having an anchor tenant to continue operating there is necessary to ‘pull’ traffic,” DBS said.

“While we understand that Metro is an anchor at Causeway Point, we see income risk being further minimised with the contribution from the PGIM portfolio. Given that Metro occupies a relatively desirable part of Causeway Point (levels 1 to 3) with good frontage, we believe that if Metro does exit the mall, a new anchor can be easily found.”

The retail scene has been struggling for years and with COVID-19, it makes things worse.

SPH CEO receives more than $1.3m salary while company loses money

Meanwhile, SPH announced that it posted a net loss of S$83.7 million for the financial year of 2020, which ended on 31 August last year (‘SPH CEO says company’s net loss due to COVID-19 while share price dives to nearly $1‘).

The net loss was SPH’s first ever. Its revenue from media advertising declined by a staggering 31.4 per cent. Revenue for the media business also shrank by 22.8 per cent.

Segments significantly hit even include its property business. SPH’s malls and purpose-built student accommodation (PBSA) assets were hit by non-cash fair value losses of S$232 million. The valuation of its retail malls fell by S$196.5 million while that of its PBSA assets fell by S$31.9 million respectively.

Without the government grants of S$68.5 million through the Jobs Support Scheme, SPH’s net loss would have been even higher. SPH CEO Ng Yat Chung has attributed his company’s losses to COVID-19.

“All our major business segments were severely disrupted by Covid-19. Our media business is badly affected by the collapse in advertising,” he said.

Despite losing money for the first time in the history of SPH, Ng continued to be awarded with bonuses and shares. In its latest annual report, Ng was found to have received a total cash and benefits of $1,350,000 in the last FY:

He was also awarded with SPH shares:

While Ng may be happy to have received bonuses and shares despite SPH is losing money, those SPH staff retrenched by him last year may have felt otherwise.


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