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Singapore Press Holdings Limited’s First Quarter Earnings: What Investors Should Know

Singapore Press Holdings Limited (SGX: T39) is Asia’s leading media organisation with four operating segments, namely, media, property, treasury and investment, and others.

On Friday, Singapore Press Holdings (SPH) announced its financial results for the first quarter ended 30 November 2018 (1Q FY19).

Financial highlights

Operating revenue for 1Q FY19 came in at S$254.3 million, down 1.7% compared to S$258.8 million seen a year ago. The fall was largely due to lower media sales, which declined by 6.8%.

SPH noted that the rate of decline in print ad revenue was the slowest seen in four quarters while revenue from digital ads saw double-digit growth of 12.9%. Overall digital revenue (which includes revenue from circulation, ads, online classifieds and other digital portals) improved by 10.1%.

The property segment’s revenue grew 11.1% to S$68.0 million mainly due to contribution from its UK student accommodation portfolio.

Meanwhile, revenue from others, which includes the aged care business, climbed 2.6% to S$24.2 million. The improvement was due to higher contribution from the online classifieds and education businesses.

Moving on, operating profit rose 7.6% to S$74.8 million largely due to lower operating expenses as a result of the absence of one-off retrenchment costs, which was incurred in 1Q FY18.

However, due to a decline in contribution from investments, net profit for the latest quarter tumbled 6.3% to S$57.9 million. SPH’s treasury and investment portfolio was partially divested by August 2018.

SPH’s balance sheet deteriorated for the reporting quarter. As of 30 November 2018, SPH had S$379.9 million in cash and cash equivalents, with S$1.84 billion in total debt. This translates to a net debt position of S$1.46 billion. In comparison, at the end of August 2018, the media giant had S$1.25 billion in net debt.

Looking ahead

SPH mentioned that its core media business is “focused on accelerating its digitisation efforts to capture growth opportunities while print continues to face industry headwinds”. As for its property business, it said:

“The Group recently invested in student accommodation assets in the UK and believes that the fundamentals remain positive. Demand for UK university education is expected to be sustained even after Brexit, as the UK is a popular destination for quality education for international students. An extensive deal pipeline is being actively reviewed as part of plans to build the portfolio to a more sizeable platform.”

On 28 December 2018, Singapore’s Info-communications Media Development Authority gave the green light for SPH and Keppel Corporation Limited (SGX: BN4) to take majority control of M1 Ltd (SGX: B2F).

SPH’s share price is at S$2.49 now. At that price, the company is selling at a trailing price-to-earnings ratio of around 15 with a dividend yield of 3.6%, without any special dividend.

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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.