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What To Look For When SPH Releases Its Earnings Report

Singapore Press Holdings Limited (SGX: T39) will release an earnings update for the three-month period from September to November 2018. The quarter also marks the start of a new financial year.

In its previous financial year, SPH recorded 4.8% lower revenue but operating profit remained stable. The media giant has been facing a challenging operating environment, mainly due to the proliferation of digital media and online news sources.

Here’s what investors should look out for when SPH releases its quarterly results on Friday.

Digital and print advertising revenue trends

Print advertising revenue declined double digit in the last financial year. Digital revenue, while up 13% from the previous year, still could not make up for the shortfall in traditional print revenue.

In the coming earnings release, investors should keep a close watch on both the print and digital revenue trends.

Can the company continue its strong momentum in growing its digital revenue stream? Will the growth in digital revenue finally make up for the declining print advertising revenue?

Property arm

The property segment remains the largest contributor to SPH operating profits. SPH owns a 70% stake in SPH REIT (SGX: SK6U), an interest in Chinatown Point, The Seletar Mall, and The Woodleigh Mall. In September 2018, SPH purchased a 3,436-bed portfolio of Purpose-Built Student Accommodation (PBSA) for S$321 million. Based on its acquisition price, management said that the investment will have a 6.3% capitalisation rate, which will provide additional rental income.

Investors should look out for any updates on how the new PBSA portfolio fared in the last quarter and its impact on the property segment’s bottom line.

Update on intention to purchase M1 Ltd (SGX: B2F) shares

Finally, SPH and Keppel Corporation Limited (SGX: BN4) announced their intention to make a voluntary general offer of S$2.06 per share for the remaining M1 shares that they do not yet own. SPH hopes to transform M1 and to leverage on M1’s mobile platform to offer on-demand and ready digital content.

SPH Management said that the transaction is earnings-accretive based on proforma historical performance.

In the upcoming earnings update, Investors should look out for any updates on this transaction and the detailed plans of how SPH plans to integrate M1’s platform into its business.

 

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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 Jeremy Chia owns shares in Keppel Corporation Limited.