3 Things Investors Should Know About Singapore Press Holdings Limited Now

Singapore Press Holdings Limited (SGX: T39) is a publisher of major newspapers in Singapore such as The Straits Times, The Business Times, Berita Harian, and others.

But there’s more to the company. It also publishes magazines, develops and invests in real estate, and has interests in activities such as events management. As part of the firm’s real estate business, it owns Seletar Mall and is the majority owner and manager of SPH REIT (SGX: SK6U), a real estate investment trust which owns retail malls in Singapore. SPH REIT’s current portfolio consists of Paragon and Clementi Mall.

Here are three things about Singapore Press Holdings that investors may want to know:

1. Persistent advertising revenue weakness

The bulk of Singapore Press Holdings’ business still comes from the advertising fees it collects on its various media platforms such as newspapers. In the first-half of the company’s fiscal 2016 (fiscal year ending 31 August 2016), 55% of its total revenue of S$555.5 million came from advertising.

Thing is, Singapore Press Holding’s advertising revenue has been declining now for several years as shown in the table below:

SPH newspaper ad revenue
Source: Singapore Press Holdings’ earnings presentations

Newspaper ad revenue for Singapore Press Holdings had continued the trend in the first-half of fiscal 2016, falling by 10.3% year-on-year.

2. Relatively better showing in the property segment

The first-half of fiscal 2016 saw Singapore Press Holdings’ Property business segment reporting a 7.9% year-on-year increase in revenue to S$120.8 million. Some of that top-line growth had trickled down to the bottom-line, as the Property segment had enjoyed a 3.2% increase in profit before tax.

According to data from S&P Global Market Intelligence, Singapore Press Holdings’ Property segment had also seen its pre-tax operating profit grow from S$142.3 million in fiscal 2012 to S$173.4 million in fiscal 2015.

In SPH REIT’s latest earnings, the trust reported that Paragon had 99.9% occupancy while Clementi Mall was fully leased. Both properties also reported low single-digit positive rental growth for new/renewed leases.

Taken as a whole, it appears that Singapore Press Holdings’ Property business is in much better shape than its Media business.

3. Low margin of error with dividend

Singapore Press Holdings appears to have a strong commitment to paying a dividend. It has been dishing out annual dividends without fail over its last 10 fiscal years.

But, the company’s average payout ratio (dividends as a percentage of earnings) in that period has been 94%, according to data from S&P Global Market Intelligence. This suggests that Singapore Press Holdings has very little room for error if it would like to maintain or grow its dividend in the future. Investors who are interested in the company’s dividend may want to take this into consideration.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.