It reported that print revenue dropped by 36% y-o-y and digital revenue dropped by 8.1% y-o-y too, as companies withhold advertising and promotional activities. However, on a q-o-q basis, advertising revenue improved thanks to a pick-up in sentiment towards the end of last year.
“We think raising prices of subscriptions would be one of the immediate ways to lighten the impact of a structural decline,” writes analyst Eing Kar Mei and Lock Mun Yee in their Jan 18 note.
SEE:UOB Kay Hian maintains its 'hold' call on SPH for undemanding valuation and uncertainty on impact of its property assets
The media business aside, SPH is seeing better metrics for its retail property, students’ accommodation. Its Orange Valley nursing homes business improved too, with occupancy up from 80% to 81%.
See also: PhillipCapital initiates coverage on Frencken with ‘buy’ and TP of $1.76
A current residential development project, Woodleigh Residence, is now 60% sold as at Jan 8 2021, versus 56% sold as at Oct 4 2020.
At current levels, SPH is trading at just half its book value, which is 2 standard deviations below its five-year mean and therefore downside has been priced in. Using Eing and Lock’s sum of the parts valuation, it implies the media business is valued at next to nothing.
They believe that if SPH goes ahead with the talked about “value unlocking” of its students’ accommodation assets, their target price can potentially go up to $1.41.
As at 11.04 am, SPH was trading flat at $1.21.
