SPH actively seeking new revenue sources for sustainable growth

Singapore Press Holdings is committed to finding new revenue sources to reverse the trend of declining profits.
Singapore Press Holdings is committed to finding new revenue sources to reverse the trend of declining profits. PHOTO: ST FILE

SINGAPORE - Media group Singapore Press Holdings (SPH) is committed to finding new revenue sources to reverse the trend of declining profits, said chairman Lee Boon Yang at SPH's annual general meeting on Tuesday (Dec 1).

He assured shareholders that the media group will continue to look for opportunities to grow in the core newspaper business, the new digital media space as well as other related businesses such as property.

Dr Lee told the gathering of around 720 shareholders that earlier this year, the company made a bid for a mixed development property project in Paya Lebar.

Although the bid did not come through eventually, the company has sufficient resources for new projects like this one, he said.

He added that SPH's property business has made healthy contributions to the group's revenue and bottom line.

SPH chief executive officer Alan Chan noted that SPH has a "war chest" of $1.2 billion to invest in new projects.

With a gearing ratio of 35 per cent, it also has the borrowing capacity to fund new acquisitions that will contribute to sustainable growth.

SPH's net profit fell 20.4 per cent to $321.7 million for the year ended Aug 31.

It earlier declared a final dividend of 13 Singapore cents per share, comprising a normal dividend of 8 cents per share and a special dividend of a 5 cents per share. The total dividend payout for the financial year 2015 is 20 cents, a shade below the 21 cent-per-share payout the previous year.

One shareholder observed that SPH seems to have only made "small and organic" investments in new media businesses.

Dr Lee said that the company prefers to be "measured, calculated and cautious" in making its investments. For now, it is focusing on nurturing the acquisitions so that they will make healthy contributions in the long term.

He cited the example of Streetsine, a property analytics company, which has merged with STProperty, and provides users with information on property-related transactions. SPH is looking at helping Streetsine expand into the region.

SPH's latest Plug and Play incubator programme will also help to identify digital media companies with potential and nurture them into strong and sustainable businesses across media sectors.

"We hope to grow some of them into big companies (with high valuation)," he said, adding that "the prospects are there and we're working hard to get them there."

Mr Chan noted that SPH had in the previous financial year made a $50-million profit by selling a "fraction" of its stake in the regional classifieds portal ST701.

While SPH is actively looking at investing in "a whole range of investments", it needs to evaluate each investment carefully. SPH had earlier invested in the early childhood sector which is seen to be growing, by acquiring a stake in Mindchamps.

"A growing sector doesn't mean everyone can jump in," said Dr Lee in response to a shareholder's question about whether SPH plans to invest in data centres.

"We have not ventured into this area at the moment, but we will not rule the possibilities out," he said, "if something turns out to be promising, we won't let it go by."

Another investor asked Dr Lee for his comments on Chinese Internet tycoon Jack Ma's mooted buyout of Hong Kong's South China Morning Post.

"This shows that the media business is still attractive to certain investors," said Dr Lee. While the business model may change, the media business will still remain relevant in the years to come. "This is very reassuring to all shareholders of SPH," he added.

The two-and-a-half-hour meeting was held at SPH's News Centre premises in Toa Payoh North.

kohping@sph.com.sg