SPH shares dip below $1 after company posts first net loss

Singapore Press Holdings' property business - which includes retail properties such as The Clementi Mall (above) - posted a better showing than the company's media segment, rising 10.3 per cent to $327.2 million. But the loss before tax was $75.8 mil
Singapore Press Holdings' property business - which includes retail properties such as The Clementi Mall (above) - posted a better showing than the company's media segment, rising 10.3 per cent to $327.2 million. But the loss before tax was $75.8 million, compared with a profit of $263 million last year. ST PHOTO: KELVIN CHNG

Singapore Press Holdings (SPH) shares sank yesterday after the media and property group fell into the red for the first time and slashed its dividend payout.

The counter shed 5.2 per cent, or 5.5 cents, to 99.5 cents in early trade - the first time it has dipped below $1 - but regained a little momentum to close at $1, down 4.76 per cent, with 44 million shares done.

The board declared a final dividend of one cent a share on Tuesday, markedly down on last year's 5.5 cent payout with a special dividend of one cent.

An interim dividend of 1.5 cents brings the total payout for this financial year to 2.5 cents.

SPH, which publishes The Straits Times and The Business Times, among other titles, posted a net loss of $83.7 million for the 12 months to Aug 31, reversing the net profit of $213.2 million a year earlier.

It took a hit from non-cash fair-value losses of $232 million - mostly on its malls and purpose-built student accommodation assets, while the media business continued to be hurt by declining advertising turnover.

Media turnover shrank 22.8 per cent to $445.1 million for the year, owing to a fall in newspaper print ad revenue.

Losses before tax for the segment were $11.4 million, compared with a profit of $54.7 million last year, after factoring in retrenchment costs of $16.6 million.

Property posted a better showing, rising 10.3 per cent to $327.2 million. But the loss before tax was $75.8 million, compared with a profit of $263 million last year, due to the fair-value losses.

DBS Bank analysts Alfie Yeo and Andy Sim have maintained their "hold" rating on SPH but lowered their target price from $1.26 to $1.09, as they expect weakness to persist in the media segment.

The group's core revenue fell within expectations, but core operating profit came in short, owing to higher-than-expected operating costs, Mr Yeo and Mr Sim said yesterday.

"We expect media to continue to be a drag in the immediate term, given the weak advertising expenditure outlook, with (the) property segment driving earnings growth and margins," they wrote.

This backdrop has prompted them to lower their forecasts for earnings next year to 2022 by 7 per cent to 18 per cent, after factoring in lower operating margins.

However, they remain bullish on the group's property business. "We see property driving earnings growth in the longer term, contributing to better margins from the 2022 (financial year)."

THE BUSINESS TIMES

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A version of this article appeared in the print edition of The Straits Times on October 15, 2020, with the headline SPH shares dip below $1 after company posts first net loss. Subscribe