3 Things You Should Know From Singapore Press Holdings Limited’s Management About Its Business Conditions

In the middle of January, Singapore Press Holdings Limited (SGX: T39) released its first quarter earnings update for its fiscal year ending 31 August 2018 (FY2018). The reporting period was from 1 August 2017 to 30 November 2017.

The company is a publisher of major newspapers in Singapore, such as The Straits Times, The Business Times, Berita Harian, Lianhe Zaobao, and more. It also has a real estate business, and is involved with other business activities such as events management and online classifieds. As part of its real estate business, it is the manager and major unitholder of SPH REIT (SGX: SK6U), a real estate investment trust which owns retail malls in Singapore.

When Singapore Press Holdings’ earnings update was released, management also gave a presentation on the matter. In the presentation deck, I saw three slides on the company’s business that I think investors should pay attention to.

The first slide shows the year-on-year changes in the pre-tax profits of Singapore Press Holdings’ various businesses in the reporting quarter:

Source: Singapore Press Holdings FY2018 first quarter earnings presentation

We can see that the Media business was the big laggard with its 20% fall in pre-tax profit. This is actually a continuation of a multi-year trend of pre-tax profit declines that the company’s Media business has been suffering from. On a positive note, the Property segment performed well, with its pre-tax profit growing. The much higher pre-tax profit from the Treasury and Investment segment was driven by gains from the sale of certain investments.

The next slide I want to discuss shows near-term trends in Singapore Press Holdings’ newspaper advertising revenue:

Source: Singapore Press Holdings FY2018 first quarter earnings presentation

The company’s newspaper advertising revenue fell hard in the reporting quarter – this is partly why the Media business segment experienced a fall in pre-tax profit. Singapore Press Holdings has experienced year-on-year declines in its newspaper ad revenue in each quarter from FY2012 to FY2016. Clearly, the latest numbers indicate that Singapore Press Holdings’ newspaper business has yet to see a bottom when it comes to falling advertising revenue.

The last slide I want to talk about illustrates the decline in the company’s operating costs in the reporting quarter:

Source: Singapore Press Holdings FY2018 first quarter earnings presentation

Investors may be pleased to know that Singapore Press Holdings has been putting cost control measures in place, and this has shown up in a 5% decline in operating costs in the reporting quarter. It’s also noteworthy that all of the company’s cost-categories were lower, with the exception of premise costs, and finance expenses.

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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.