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Three Things To Like About Singapore Press Holdings Limited

SPHSome people believe that the days for newspapers are numbered. But the death of newspapers has probably been greatly exaggerated.

It is not that traditional newspapers are past their sell-by date but it is the way that news is disseminated that has changed appreciably. No longer are readers restricted to thumbing the pages of a broadsheet or tabloid.

And that is the first thing to like about Singapore Press Holdings Limited (SGX: T39) – its ability to reach out to the different demographics.

From a very unscientific straw poll, it strikes me that readers who are over the age of 40 still value print. The same cannot be said of the “thirtysomethings”, who probably like to sit in front of a desktop, peer into a laptop or read their news on a mobile. People in their early 20s are some of the most likely to warm to online videos.

So it is not that newspapers are dead but the way that news is delivered that has changed. SPH has yet to reach the tipping point when it can strike a balance between online and print. But with 20 million unique visitors every month, the signs are promising.

The second thing to like about Singapore is its efficient use of assets. At a superficial level, an Asset Turnover of 0.2 is not much to write home about. It implies that the company only generates S$0.20 for every dollar of asset employed in the business. That is less than half the median Asset Turnover for Singapore’s blue chips.

But dig a little deeper and something quite different becomes apparent.

The Asset Turnover for its Newspaper and Magazine business is an above-average 1.6, while its property division only generated S$0.05 of sales for every dollar of asset employed in the business. SPH’s low Asset Turnover has been a consequence of its asset-heavy property division, which has now been partially divested into a Real Estate Investment Trust, namely, SPH REIT (SGX: SK6U)

The third thing to like about SPH is the reliable dividend payout. Over the last eight years, the payout has been around S$0.15 per share. The dividends have helped to unpin an annual total return of 7.5%. So, while the overall capital growth has been an unspectacular 5% since August 2006, the total return has been a more acceptable 80%.

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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 Singapore Director David Kuo doesn’t own shares in any companies mentioned.