Singapore Press Holdings 01 (May 08 - Nov 11)

[Rontan]

From OCBC research:

Singapore Press Holdings (SPH) announced its 1Q09 results yesterday with topline growing by 9% YoY to S$343m while PATMI took a 35% YoY nose dive to S$73m. The poor showing was primarily due to a S$33.7m investment loss (first since 1Q03) as SPH suffered significant Mark-to-Market (MTM) losses on its investment portfolio. Stripping out the effects of investments, SPH managed a credible flat pre-tax performance of S$127.8m despite rising costs and slowing core print revenue. We believe that most of its MTM losses were incurred due to declining values of externally managed funds. SPH’s print revenue also fell more than expected and we are now forecasting a 2.5% (prev. 1.6%) fall in its FY09F print revenue. Overall, our topline estimates are buffered by Sky@Eleven’s recognition, but our FY09F bottomline is lowered by 14% due to the MTM losses incurred. Dividends are expected to hold at S$0.215/share (7.1% yield) for FY09F. We have swapped valuation for its core operations to PER (prev. DCF) methodology to more accurately reflect its share price driver. Our SOTP fair value is moderated to S$3.13 (prev. S$4.86) and we downgrade to HOLD. With our revised forecasts, SPH is trading at 14x PER, above its trough valuation of 12x (12-28x between 2001 and 2008). We will turn buyers at S$2.60-S$2.65 when FY09F PER is ~12x. (Kelly Chia)

Can any expert help to educate me what is SOTP valuation? Thanks!

[ucypmas]

SOTP refers to Sum-Of-The-Parts - i.e. the analysts looked at each of the businesses separately and aggregated their separate valuation to derive the "fair value"

[b0rderc0llie]

let me be very frank.... i would rather bet my money on an ant surviving past 30 days than to place money on SPH...

it has a smallest market (besides luxenburg), a controlled master, and therefore, a make believe free press and a limited revenue company... why would i be stupid to put 1 dime into this company for the long haul ??? why would i, unless, i have gone mad

If I believe a company to be that bad, I would place my money to short it

[Rontan]

SOTP refers to Sum-Of-The-Parts - i.e. the analysts looked at each of the businesses separately and aggregated their separate valuation to derive the "fair value"

Thank u Ucypmas!

[Rontan]

let me be very frank.... i would rather bet my money on an ant surviving past 30 days than to place money on SPH...

it has a smallest market (besides luxenburg), a controlled master, and therefore, a make believe free press and a limited revenue company... why would i be stupid to put 1 dime into this company for the long haul ??? why would i, unless, i have gone mad

Aiyo, y so negative about this company? If I can remember correctly, lifespan of ant is about 2.5 to 3 months, so your bet definitely win one

SPH may not be a great company, but it is operating in a monopolistic environment, even though it is a small market. But sometimes it is better to be a big fish in a small pond than a small fish in a big pond. Chances of surviving is greater in the first case. Well, I am that stupid one that has put my dime into this one, at least for now cause I am sitting on paper loss

[kennynah]

sometimes it is better to be a big fish in a small pond than a small fish in a big pond.

i concur that this appears to be the mentality of many singaporean setups... they dont get anywhere eventually... too myopic in outlook and very risks aversed with little creativity.... just bcos we singaporeans have not too high an expectation, the current chicken rice and wanton noodle can continue operating...if we are anything like the taiwanese, our local food stalls would have chup larp a long time ago already.... making way for more creative and tasty food at affordable prices...

[iam802]

someone ask me the same question very recently. "Big fish small pond or small fish big pond"

eg.
If my girl does very well in her PSLE and she has the option to go to most secondary school of her choice... would I encourage her to go to an 'elite' school or to a 'neighbourhood' school?

I have no answer to that question....and I just digress...hahhaha

[ucypmas]

If the fish is edible, I will eat it, regardless of the pond.

[Rontan]

sometimes it is better to be a big fish in a small pond than a small fish in a big pond.

i concur that this appears to be the mentality of many singaporean setups... they dont get anywhere eventually... too myopic in outlook and very risks aversed with little creativity.... just bcos we singaporeans have not too high an expectation, the current chicken rice and wanton noodle can continue operating...if we are anything like the taiwanese, our local food stalls would have chup larp a long time ago already.... making way for more creative and tasty food at affordable prices...

have to agree with what u said. Many Singaporeans just want to play it safe, looking for the best deal but not willing to take on much risk. That is why we don't have many entrepreneurs to show case. Looking at SPH again, and using the fish analogy, I can safely conclude that SPH is surviving well as a big fish in our small pond. Whether or not they can leap out of this small pond into the ocean is still questionable. But can see that they are trying, though so far the effort is still not well rewarded yet. hmmm..maybe one day, they really can just make it and turn into a whale...

[iam802]

Here's a chart. And it says it all.

Around Jan 6, it starts to dive. So, when was the earnings announced?

Maybe couple of days after the sky diving activity.