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Wed, Oct 14, 2020 – 9:32 AM
UPDATED Wed, Oct 14, 2020 – 10:33 am
SHARES in Singapore Press Holdings (SPH) plunged on Wednesday as the board cut dividends after the media and the real estate group fell into the red for the first time.
The counter lost 5.2 percent or 5.5 Singapore cents to 99.5 cents at 9:04 a.m. M., The first time it fell below 1 Singapore dollar.
It regained some momentum later in the morning, trading at S $ 1.01 at 9:41 am, up 3.8 percent or S $ 0.04 from Tuesday’s close.
About 17 million shares had changed hands by then, making it the third most traded by volume.
On Tuesday, the board declared a final dividend of one Singapore penny per share, up from 5.5 cents last year, which included a special one penny dividend. Along with the interim dividend of 1.5 cents, the total dividend payment for fiscal year 20 will be 2.5 cents.
SPH, which publishes The Business Times, posted a net loss of S $ 83.7 million for the full year ended August 31, as it was affected by non-cash fair value losses of S $ 232 million, primarily at its shopping centers and specially constructed student housing assets. earnings of S $ 213.2 million a year ago.
Its media business continued to be affected by declining advertising revenue. For the full year, revenues from the media segment contracted 22.8 percent to S $ 445.1 million due to a drop in newspaper print advertising revenue. The pre-tax loss for the segment was S $ 11.4 million, compared to a gain of S $ 54.7 million for fiscal year 2019, after considering reduction costs of S $ 16.6 million.
The property segment performed better, increasing 10.3 percent to S $ 327.2 million. But the pre-tax loss for this segment was S $ 75.8 million, compared to a gain of S $ 263 million in fiscal 2019, due to fair value losses.
DBS analysts Alfie Yeo and Andy Sim maintained their “hold” rating on SPH on Wednesday, lowering their price target to S $ 1.09 from the previous S $ 1.26 as they expect weakness to persist in the segment. of media for FY21, dragging down overall earnings.
The group’s core revenue fell within expectations, but core operating profit fell short due to higher-than-expected operating costs, Yeo and Sim wrote in a report.
“We expect the media to remain a drag in the immediate term, given the weak outlook for ad spending, with the real estate segment driving profit and margin growth,” they wrote.
Against this backdrop, analysts have lowered their profit forecasts in fiscal year 21 to fiscal year 22 by 7 to 18 percent after accounting for lower operating margins. However, they remain optimistic about the group’s real estate business.
“Nonetheless, we see the property driving long-term earnings growth, contributing to better margins for the group since fiscal year 22,” analysts said.
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