Is Singapore Press Holdings Limited Facing A Structural Decline In Its Business?

Ten years ago in 2004, Singapore Press Holdings Limited (SGX: T39) traded at around S$4.80 per share. Today, the company trades at S$4.18 per share. Even if you factored in the gains from the company’s dividends, an investment in Singapore Press Holdings would have returned barely 1% to 2% annually – that’s not enough to fight off inflation.

Thing is, Singapore Press Holding’s flat share price would not come as a surprise if we look at its business figures. It has not been able to grow its earnings or revenue significantly over the past 10 years and the readership numbers for its newspapers had been more or less stagnant in the same time.

Faced with all these issues, it’s perhaps fair to question: Is Singapore Press Holdings experiencing a structural decline in its business?

If we look at what Singapore Press Holdings does, it is mainly concentrated in the media space. Within that space, it has businesses in newspapers, magazines, book publishing, internet and new media, events and outdoor media, and broadcasting. The company’s only real venture outside media is in properties, of which it has control over the retail malls Paragon and The Clementi Mall (and the soon-to-be-opened Seletar Mall).

Segments ripe for disruption

Given that Singapore Press Holdings still depends on its newspaper and magazine publishing businesses to supply half of its profit, let’s take a look at them first.

Unfortunately, this segment of Singapore Press Holdings is the one facing the largest disruption to its traditional business model (earning its keep from offline advertisers) due to the rise of online advertising and the ubiquity of internet search and social media. The company has already started to migrate its newspaper businesses online. How successful its digital newspaper model would work compared to the traditional print format is yet to be seen.

Moving over to broadcasting, most of Singapore Press Holdings’ listeners are drivers on the roads. Therefore, it seems that as long as we need to keep our eyes on the road while driving, there seems to be little alternative for other activities other than listening to the radio. However, as mobile devices proliferate, listening to audiobooks or music from our phones while in the car is much easier to accomplish. In fact, vehicles are increasingly more connected to the web, thus giving us more listening choices in the future while on the road. This would be an area for the company to watch.

As for Singapore Press Holdings’ other segments, they seem to be more resilient.

For instance, the company’s properties and events and outdoor media segments might not be greatly affected by disruption from new technologies. Although there have been discussions on how the rise of e-commerce might render many retail malls obsolete, I have trouble seeing a sea of empty malls in Singapore. It’s true that people do find shopping online more convenient, but I feel that people in general will always enjoy a day out with families or friends for food and leisure in a mall. As long as humans remain social creatures, these segments would continue to do okay for Singapore Press Holdings.

Foolish Take

Singapore Press Holdings Limited should not have difficulty surviving the next decade. Although some of its businesses are going through a transformation stage, its management seems aware of the challenges and are actively looking for ways to turn the business around. However, it is hard to see how the company can be a strong growth company going forward. Thus the following question: Is a company which can merely survive good enough for investors?

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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 contributor Stanley Lim doesn’t own shares in any companies mentioned.