SPH mulls restructuring as shares are ‘undervalued’

Singapore Press Holdings’ stock price rebounded to a one-year high as market optimism grew following news of a possible restructuring.

  • Singapore Press Holdings Ltd (SGX: T39) share price surges 4.8% more to hit S$1.75 per share
  • The media and property group is considering ‘options’ for its businesses
  • Revenue from the media arm had weighed on SPH’s first-half earnings
  • CIMB analysts upgraded SPH to ‘add’ and increased their dividend forecasts
  • Buy and sell SPH shares with an IG account

SPH share price: What’s the latest?

Shares of Singapore Press Holdings (SPH) continued climbing on Monday, gaining 4.8% to S$1.75 as of 11:26 SGT.

They finished at S$1.67 last Thursday (01 April 2021), leaping 9.2% day-on-day and up 11.3% since SPH announced a strategic review and an improvement in its property businesses. That is the stock’s strongest close in about a year.

UOB’s research team upgraded SPH to ‘buy’ with a 43% higher target price of S$1.74, given ‘improved prospects’ for its property assets.

DBS gave a ‘hold’ call and S$1.15 target, citing the drag in the media segment and the possible restructuring plan.

SPH thinks about ‘options’ for businesses

SPH is undergoing a strategic review to ‘consider options for its various businesses’, the media and property play announced last Tuesday (30 March 2021) evening.

Its board of directors believes SPH remains ‘undervalued’ - although the media business continues to face a challenging operating environment and outlook - and thus the review will aim to ‘unlock and maximise’ long-term shareholder value.

The group publishes newspapers including The Straits Times, The New Paper, and Lianhe Zaobao, and operates five radio stations.

CIMB analysts, agreeing that the shares are undervalued, upgraded SPH to ‘add’ with a higher target price of S$2.09. There is upside potential if SPH successfully unlocks shareholder value, they added.

Half-year media revenue slides 23.9%

For its first half ended 28 February 2021, a decline in operating revenue from the media division dragged SPH’s total revenue to shrink 4.2% to S$460.3 million.

This was partially offset by higher rental income mainly from the purpose-built student accommodation business and the retail and commercial segments, as well as grant income from the Jobs Support Scheme.

Revenue from the media business fell 23.9%, led by the decline in newspaper print ad revenue and absence of revenue from Buzz which was divested in July 2020.

SPH CEO Ng Yat Chung said: ‘Despite expanding our audience reach, our media business continues to be affected by the structural decline in advertising and the impact of Covid-19.’

Group operating profit rose 16.6% while net profit increased 26.1%, according to results released last week.

For 1HFY21, SPH declared S$0.03 dividend per share, versus S$0.025 for FY20. UOB analysts see potential for the dividends to be reinstated to a larger extent, and anticipate improved demand for the student accommodation assets.

CIMB increased its FY21-23 dividend forecasts as there is now less reason for SPH to conserve cash given the recovering property businesses.

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