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Two Sides of a Coin: What Investors Should Know About Singapore Press Holding Limited’s Latest Results

Singapore Press Holdings Limited (SGX: T39) or SPH in short, is a publisher of newspapers such as The Straits Times, The Business Times, The New Paper, Berita Harian, My Paper, Lianhe Zaobao and others.

It is also in the real estate business and other activities like events management. As part of the firm’s 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.

The company has recently reported its third quarter results for Financial Year 2017. In this article, we will look at the good and the “bad” from its latest results.

But before going into the details, let’s have a summary of the overall results.

Overall results

Source: SPH FY 2017 3Q earnings presentation

Overall, the performance was negative for the quarter, with all metrics down on a year-on-year basis.

The main driver of the poor performance was the media business.

“Bad”

As the overall results have indicated, the overall performance is negative for the firm. Here, we will look at some “bad” aspects from SPH’s results that investors should know.

First of all, the media business continues to perform weakly, with both advertising and circulation revenue down 16.2% and 3.5%, respectively, on a year-on year basis.

Secondly, operating margin (excluding one-off items) is down below 30%, as a result of the decline in revenue in the media segment.

Thirdly, investment income is also down on a year-on-year basis of 26.6%, due to fair value losses on hedges for portfolio investment.

Good

Despite the overall negativity, there are still some bright spots from the latest results.

First of all, revenue is up by 2% year-on-year for the property segment due to higher rental income. Moreover, cost is down on a year-on-year basis, resulting in a 5.4% increase in net property income.

Secondly, in responding to the challenging environment, SPH reduced its overall cost structure by 6.7% year-on-year (excluding impairment).

Lastly, SPH continues to pursue investments to diversify its income based. Two recent transactions are the acquisition of Orange Valley Healthcare and SPH’s joint venture winning the tender to develop a mixed commercial and residential site at Bidadari.

Conclusion

Overall, SPH continues to face challenges in its media business. On the other hand, the property business remains resilient and the company is actively pursuing diversification strategies.

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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.