Singapore Press Holdings Limited’s Share Price Is Down By 9% In 6 Months: Here’s Why

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

The company is also in the real estate business and is involved with other activities such as events management. As part of Singapore Press Holdings’ real estate activities, it is the majority owner and manager of SPH REIT (SGX: SK6U), a real estate investment trust which owns retail malls in Singapore.

Over the last six months, the company’s stock price is down by 9%. What may have caused this?

Reasons for the decline

There are many reasons why a stock’s price would decline.

But, the reasons can generally be classified as business-performance-related, or investor-sentiment-related. The former deals with how a stock’s business has performed or is expected to perform. And in terms of business performance, one of the really important numbers would be the stock’s profit.

Meanwhile, the latter is about the overall mood of market participants – are investors more greedy than fearful, more pessimistic than optimistic et cetera? In general, negative emotions (fear and pessimism) tend to drag down the prices of stocks while positive emotions (greed and optimism) tend to push up stock prices.

The case with Singapore Press Holdings

In Singapore Press Holdings’ case, it appears to be the former at work. Here’s a table showing the company’s latest results for the quarter ended 30 November 2016:

Singapore Press Holdings income statement
Source: Singapore Press Holdings earnings release

We can see that Singapore Press Holdings reported lower revenue, operating profit, and net profit in its latest results announcement.

The company’s bottom-line was significantly impacted by a one-off impairment charge for an associate and for the review of its media business. But even if we adjust for the one-off items, Singapore Press Holdings’ profit would still be down by some 12.4% year-on-year.

It’s worth noting too that Singapore Press Holdings experienced a sharp 15.0% decline in newspaper advertising revenue during its reporting quarter. The company’s newspaper advertising revenue has suffered consecutive declines from FY2012 (fiscal year ended 31 August 2012) to FY2016.

So there has clearly been a weaker financial performance from Singapore Press Holdings in its last reporting quarter. That being said, there is a positive sign in the form of a 3.1% increase in net property income.

Investors may want to keep an eye on changes to Singapore Press Holdings’ traditional print media business, which has been struggling, as alluded to by the falling newspaper advertising revenues I mentioned earlier.

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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.