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Tug-of-Fools: SPH – The Bull Argument

250px-Bulle_und_Bär_FrankfurtWhen people talk about Singapore Press Holdings (SGX: T39), the only thing they can often relate to is newspapers. However, they couldn’t be more wrong. SPH has grown over the years to be Southeast Asia’s leading media organisation, built on the success of its flagship newspapers.

Apart from its core newspaper business, SPH has expanded its offerings to include five other businesses: Magazines, Events and Outdoor Media, Internet media, Properties and Broadcasting. Despite being the largest content provider in Singapore, SPH is not complacent and constantly moving forward. Let us take a look at how SPH is doing below.

Digital Revolution

With the stark improvement in technology compared to just a decade ago, people are more wired and connected to the Internet. Just take a look at passengers on trains and buses, and you can’t help but notice that smartphones are taking over newspapers as commuters overcome boredom during their journeys.

Even though its core print business is doing fine at the moment, SPH is appealing to the tech-savvy generation and launching many new apps and online initiatives such as The Straits Times’ iPad & iPhone applications and the “ST” businesses which include leading online marketplace for jobs (STJobs), property (STProperty), cars (STCars) and general classifieds (STClassifieds).

Property Investment

If you patronise Paragon for your shopping needs, there is good news for you. Paragon and Clementi Mall are both property investments by SPH and there will be an upcoming listing of SPH REIT on July 24.

With the establishment of a REIT, it would unlock and release capital from the retail properties back to the SPH Group. Coupled with the stable cash flow from its print business, SPH is able to put its cash hoard to use as seen below.

Acquisitions for growth

Just like Singpost’s growth strategy, SPH is utilising its free cash flow to explore new growth strategies across its investment property, media and other businesses.

In April this year, the company said it would pay S$48 million for SgCarMart. Other acquisitions include Hardwarezone and ACP magazines, which owns Women’s Weekly and CLEO. This shows that SPH is not resting on its laurels but always looking out for growth opportunities relevant to its existing businesses.

Foolish Bottom-Line

In a nutshell, SPH is the monopoly leader for providing content in Singapore and that is likely to persist for quite some time. Furthermore, with a retail malls IPO soon, it could explore more property development that could be a driver for future growth.

Lastly, SPH’s stable print business has allowed the company to deliver an attractive and consistent dividend yield of 5 – 6% over the years. It’s no wonder then that SPH is the darling of many retirees who seek income stability.

That concludes the bull argument. You can read why Ser Jing is bearish here.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool contributor James Yeo doesn’t own shares in any companies mentioned.