1H09 total operating revs +2.8% YoY, largely supported by Sky@eleven and Paragon rental income. And although 1H09 core print revenues -9% YoY, this did not exceed expectations. For example, while 1H09 ad revenues fell 14% YoY, the S$334m 1H09 ad revenues were in line with DBe (S$340m). 1H09 Sky@eleven revenues (S$91m) were below expectations on slower-than-expected construction progress, but management assured the project is on track for CY2010 completion. We recognize SPH’s FY09e earnings and yield are dependent on Sky@eleven contributions and as such will watch construction progress closely.
1H09 core print opex grew 5.7% YoY as higher newsprint costs and new media investments offset an 8% YoY decline in staff costs (lower bonuses). As such, core print EBITDA margins declined to 28.1% (vs 1H08 36.1% and DBFY09e 29%). Going forward, management is implementing a number of cost controls (e.g. controlled hiring, salary reductions) that should support 2H09 margins.
Despite the general slowdown and various one-offs impacting SPH’s 1H09, the core operations were generally in line and we expect cost controls to increasingly support. We believe SPH’s near-term dividends are sustainable and maintain Hold. Our SOTP TP of S3.10 is derived using DCF for the core media business (7% WACC & 1% g, reflecting S’pore’s long-term growth potential), Paragon at discount to book value, M1 at DB TP and investments as at end 1Q09. Key risks include adex, property valuations and investments.
Sponsored Links
No comments:
Post a Comment