SPH -DBS Vickers

Singapore Press Holdings
January AdEx numbers not encouraging
Nielsen Media released their January advertising expenditure figures, which indicate
that SPH’s display advertising volume in January fell by 7.3% from last year. These
figures also indicate that for the first 5 months of SPH’s fiscal year, display revenue
has declined by 3.3% yoy, which may be due to competition from Today, which has
been growing its market share. We maintain our SPH estimates for now, where we
expect c.4% growth in newspaper revenues, as SPH tends to do a little better than
Nielsen Media’s figures, but point out that core newspaper growth is at best in the
mid-single digit region. Maintain HOLD with a target price of S$4.44.
• Weak January AdEx numbers for SPH. Nielsen Media released their Jan 2006 advertising
expenditure figures, which indicate that SPH’s display advertising volume in January fell by 7.3%
from last year. The figures also indicate that for the first five months of FY06, SPH’s display
advertising volume (Sep 05 to Jan 06) has fallen by 3.3% y-o-y. In contrast, Nielsen Media
numbers indicate that volumes for Today in January rose by 1% yoy and by 12.6% for Sep
05 to Jan 06 over the same period 12 months ago.
• Competition from Today may be hurting SPH’s display AdEx. We believe the weakerthan-
expected AdEx numbers for SPH may be due to competition from Today, as volumes
for Today are performing better than SPH. The decline could also be partly attributable to
the cessation of Streats, which took place in Jan 2005. We maintain our estimates for now
as SPH usually does better than Nielsen Media’s estimates (as in 1Q06). However, we do
believe the numbers indicate that we should not expect more than mid-single digit growth
for the Group’s core newspaper business.
• Maintain HOLD, TP S$4.44. This is based on sum-of-parts valuation: S$3.05 for the core
Newspaper business (12x FY07 EV/EBITDA for Newspaper earnings), S$1.10 for SPH’s
properties and S$0.68 for the Group’s cash and investment holdings, less debt of c. S$0.39. We
maintain HOLD for SPH, which is supported by an attractive net yield of 5.6%

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