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3 Things To Like About Singapore Press Holdings Limited’s 2018 Third-Quarter Earnings

Singapore Press Holdings Limited (SGX: T39), or SPH, is Asia’s leading media organisation with three business segments of Media, Property and Others.

On Wednesday (11 July), SPH announced its financial performance for the third quarter ended 31 May 2018. Here are three things to like about the latest results.

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Higher operating profit and net profit

For the quarter, operating profit, which is recurring earnings from the three business segments, improved 29.6% year-on-year to S$44.4 million. The increase came about despite revenue falling 3.8% to S$250.1 million.

Revenue from the Media segment fell 8% to S$167.9 million on the back of lower advertisement and circulation revenue. However, SPH said that it is “seeing early signs of a slower decline” for its Media revenue.

Property revenue dropped 2.4% to S$60.1 million due to lower rental income from SPH’s retail assets. Revenue from the other businesses grew 38.5% to S$22.0 million because of “contributions from the aged care and education businesses”. In April 2017, SPH acquired Orange Valley, Singapore’s largest private nursing home operator.

Net profit attributable to shareholders surged 64.3% to S$47.4 million, largely due to higher net income from investments, and increase in the share of results of associates and joint ventures.

Improving digital business

Due to promotions during the third quarter, the media giant’s daily average digital circulation copies rose by 121,000 copies, or 43.5%, year-on-year.

The E-paper, a digital version of the print paper, is also showing healthy readership numbers. It has more than 37,000 unique readers for The Straits Times (ST), which is over 15% of ST’s total circulation.

Going forward, SPH will continue promoting “E-paper readership and add new exciting features, while improving its understanding of print readership with valuable data analytics”.

For the nine-month period, total digital ad revenue rose by 10% year-on-year.

Expansion of property and aged care portfolios

Property is the largest segment by profit for SPH, which accounted for around 60% of the 2018 third-quarter profit. This segment includes a 70% stake in SPH REIT (SGX: SK6U). SPH REIT is a retail real estate investment trust (REIT) that has interests in Paragon and The Clementi Mall. Last month, the REIT acquired The Rail Mall for S$63.2 million.

To grow the Property business further, a new asset management company called Straits Capitol was set up in Britain to look at a healthy pipeline of deals actively. The United Kingdom is an attractive market due to Brexit, which has created certain opportunities.

Ng Yat Chung, chief executive of SPH, said:

“… Our new strategy is to focus on the acquisition of cash-yielding real estate assets overseas. We are also preparing the Aged Care business for overseas expansion.”

The Foolish takeaway

Even though SPH’s core media business is facing digital disruption, it is heartening to see the company improving its digital capabilities to remain relevant in the market. It is also interesting to note that SPH is looking to expand its property and aged care businesses beyond Singapore.

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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 Sudhan P doesn’t own shares in any companies mentioned.