Singapore Press Holdings -BUY
Thursday, January 26, 2006
Advertising Revenue - Positive Trend in Page-Count Figures
Current Price : S$4.28
Target (12-mth) : S$5.00
Positive trend in page-count figures. In early-Dec 05, we highlighted a positive sign in November's advertising spending. Saturday issues of The Straits Times, the dominant newspaper in Singapore, were getting thicker with 250+ pages. This was a high page-count compared to the usual 220-230 pages. The high page-count has continued into December and January. If this trend continues, advertising revenue (AR) growth could be as high as 10% instead of the weak 2% reported in SPH's 1QFY06 or our forecast of 5% for FY06, FY07 and FY08. At this juncture, we are maintaining our earnings forecasts until we see a longer positive trend.
ACNielsen has under-estimated SPH's advertising revenue growth. Most analysts track ACNielsen data as a guide to SPH's AR growth. ACNielsen data has been understating SPH's growth. ACNielsen data had implied a contraction of 4.6% in 4QFY05 and 3.8% in 1QFY06. SPH's AR actually grew by 1.5% and 2.2% respectively. ACNielsen does not capture SPH's complete AR as certain ads are not included in its counts.
Growth momentum will be more obvious from 2QFY06 onwards. Apart from rising advertising spending, SPH's AR will be compared to a base without Streats (from Jan 05 onwards). Hence, actual AR growth will be higher. We believe newsflow on SPH will increasingly become more positive. Traditionally, SPH's share price has a strong relationship to its AR growth.
Current share price weakness presents a good buying opportunity, as it is at the bottom of its last one-year trading range of S$4.20-5.00 The stock also offers a high net dividend yield of 4.7% to 5.0%. Dividend yield in FY06 could be higher if SPH is successful in selling the Times Industrial Building which management said has received offers and are currently being evaluated. Maintain BUY
Advertising Revenue - Positive Trend in Page-Count Figures
Current Price : S$4.28
Target (12-mth) : S$5.00
Positive trend in page-count figures. In early-Dec 05, we highlighted a positive sign in November's advertising spending. Saturday issues of The Straits Times, the dominant newspaper in Singapore, were getting thicker with 250+ pages. This was a high page-count compared to the usual 220-230 pages. The high page-count has continued into December and January. If this trend continues, advertising revenue (AR) growth could be as high as 10% instead of the weak 2% reported in SPH's 1QFY06 or our forecast of 5% for FY06, FY07 and FY08. At this juncture, we are maintaining our earnings forecasts until we see a longer positive trend.
ACNielsen has under-estimated SPH's advertising revenue growth. Most analysts track ACNielsen data as a guide to SPH's AR growth. ACNielsen data has been understating SPH's growth. ACNielsen data had implied a contraction of 4.6% in 4QFY05 and 3.8% in 1QFY06. SPH's AR actually grew by 1.5% and 2.2% respectively. ACNielsen does not capture SPH's complete AR as certain ads are not included in its counts.
Growth momentum will be more obvious from 2QFY06 onwards. Apart from rising advertising spending, SPH's AR will be compared to a base without Streats (from Jan 05 onwards). Hence, actual AR growth will be higher. We believe newsflow on SPH will increasingly become more positive. Traditionally, SPH's share price has a strong relationship to its AR growth.
Current share price weakness presents a good buying opportunity, as it is at the bottom of its last one-year trading range of S$4.20-5.00 The stock also offers a high net dividend yield of 4.7% to 5.0%. Dividend yield in FY06 could be higher if SPH is successful in selling the Times Industrial Building which management said has received offers and are currently being evaluated. Maintain BUY
posted by SmartYInvestor at 4:48 PM
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