Singapore Press Holdings'(SPH) share price has declined by 3% YTD but still outperformed the STI, proving its resilience amid the financial "aftershocks" following the catastrophe in Japan. The stock could still offer an attractive dividend yield of 6% for FY Aug11F. We expect an interim dividend of 7 cents per share to be declared in its upcoming second-quarter results. Maintain BUY.
As a testament to its track record in retail mall management, SPH secured a 100% take-up rate for the retail space at its 60%-owned Clementi Mall ahead of the mall's completion in mid-April. Almost half the tenants have already started operations this week.
In line with its strategy to raise its exposure in the retail mall sector for the long term, we expect SPH to continue to scour for new commercial sites. Possible acquisition targets are the white site beside the Jurong East MRT station, which will be launched in a week's time, and a commercial/residential site at Hillview Avenue, whose tender will close in late April. In the core media business, the classified advertisement volume declined moderately in the past three months due to fewer classified ads as a result of weakness in the second-hand car market and drop in secondary residential property transactions. Nevertheless, display ad revenue continues to lead the recovery and we do not foresee the risk of earnings disappointment.
We see the growth of the commercial property portfolio and the possibility of an eventual spinoff of the assets as a long-term catalyst for SPH. The implied valuation of 11x FY Aug11F PER for its core media business is near a five-year trough. Maintain BUY with a SOTP-based target price of $4.75.
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