SPH undergoing strategic review to consider options for its various businesses

The objective of the review is to "unlock and maximise long-term shareholder value".
The objective of the review is to "unlock and maximise long-term shareholder value".PHOTO: ST FILE

SINGAPORE - Singapore Press Holdings (SPH) is undergoing a strategic review to consider the options for its various businesses.

The objective of the review is to "unlock and maximise long-term shareholder value", the group announced on Tuesday (March 30).

While the media business continues to face a challenging operating environment and outlook, the board of directors believes that the company remains undervalued, it added.

Credit Suisse (Singapore) has been appointed as its financial adviser for the review.

This comes as SPH posted a net profit of $97.9 million as its various businesses recover from the ongoing Covid-19 pandemic.

The group, which publishes The Straits Times, reported a 26.1 per cent rise in net profit for the first half of the financial year that ended on Feb 28, it said on Tuesday.

The company remains operationally profitable at $119.8 million, an increase of 16.6 per cent.

Overall, total revenue dropped 4.2 per cent to $460.3 million, with a decline in operating revenue from the media business.

The decline was partially offset by higher rental income of $15.4 million, mainly from purpose-built student accommodation (PBSA) and the retail and commercial segment. It was also cushioned by a grant income of $15 million from the Jobs Support Scheme (JSS).

The total costs dropped by 9.8 per cent to $340.5 million, mainly due to lower materials, production and distribution costs which fell 40.9 per cent, or $23.9 million, with the decline in revenue from media and exhibitions. Disciplined cost management also reduced staff costs by 4.6 per cent to $158 million due to a lower headcount.

The media segment posted a profit of $3.1 million, down 70.9 per cent year on year. Excluding grants from the Jobs Support Scheme, it recognised a pre-tax loss of $9.7 million.

Mr Ng Yat Chung, chief executive officer of SPH, said the performance of the company’s non-media business has improved as the economy recovers.

“Despite expanding our reach, our media business continues to be affected by the structural decline in advertising and the impact of Covid-19,” he added. “We will continue our digital transformation strategy and efforts to place media on a more sustainable footing.”

SPH’s core business is in the publishing of newspapers, magazines and books. It also owns other digital products, online classifieds, radio stations and outdoor media. 

On the property front, SPH owns about 66 per cent in SPH Reit, whose portfolio comprises three properties in Singapore, namely Paragon, The Clementi Mall and The Rail Mall. In Australia, SPH Reit holds a 85 per cent stake in Figtree Grove Shopping Centre and a 50 per cent stake in Westfield Marion Shopping Centre. 

SPH also owns and operates The Seletar Mall, and is developing an integrated development consisting of The Woodleigh Residences and The Woodleigh Mall. In addition, it owns purpose-built student accommodation in the United Kingdom and Germany.

The company is also in the aged care sector in Singapore and Japan, and owns Orange Valley, one of Singapore’s largest nursing homes. 

It also has investments in assets such as motoring portal sgCarMart, jobs platform FastJobs, telco M1 and South Korean e-commerce giant Coupang, and is developing data centre facilities at Genting Lane in a joint venture with two Keppel Corporation subsidiaries.

On the strategic review, SPH noted that there is no assurance that this will result in any transaction or that any definitive or binding agreement will be reached.

The company said it will make further announcements as appropriate, and advised shareholders to exercise caution when dealing in its shares.

SPH shares closed flat at S$1.50 on Tuesday before the news.

National University of Singapore Business School’s Associate Professor Lawrence Loh said the review is timely for the company, and should go into the fundamentals of the core business portfolio.

“SPH may take a radical relook into its future direction,” he added. “The main idea is strategic innovation and selective scaling. I believe SPH has the resolve and resources to transform itself.”