SPH - Newspaper ad demand rising sequentially

Newspaper ad demand bottomed in 3Q FY09 and picked up in 4Q FY09. Estimated total classified volume fell 17% YoY in 4Q – a big improvement from -33% in 3Q.

Also, our estimates indicate that display ad volume fell 9% YoY in 4Q, marginally better than 3Q’s -11% and 2Q’s -10%.

More importantly, we continue to see a sequential pick-up in ad demand. 4Q classified ad volume is estimated to have jumped 11% QoQ (as job ad volume grew 16% sequentially), versus 3Q’s -3% QoQ and 2Q’s -13% QoQ. Further, despite a seasonally stronger 3Q display ad demand, 4Q display ad volume is estimated to be flat QoQ.

While SPH has started to outperform, the stock continues to trade at a discount to the market. We maintain an OUTPERFORM rating with a target price of S$4.41.

SPH is scheduled to report its FY09 results on 12 October. CS is hosting the company’s post results investor meeting on 14 October.

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