ANALYSTS SAY: Buy, Sell, Hold (17 Jan '18)

Singapore Press Holdings:

Near-term reprieve for ad spending

 Operating revenue dropped 7.0% YoY
 Improved retail ad spend
 FV estimate revised to S$2.51

1QFY18 PATMI grew 32.1% YoY
SPH’s 1QFY18 results were broadly within expectations. Operating revenue fell 7.0% YoY to S$258.8m, on the back of a 13.9% YoY drop in media revenue. This was on the back of 16.7% and 7.3% YoY drops in advertisement and circulation revenues, respectively. The property segment delivered revenue growth of 1.2% YoY to S$61.2m, on the back of higher rental income from the group’s retail assets. The group also clocked in revenue growth of 48.2% YoY from its other businesses, especially from its aged care business. We note that operating costs have dropped 5.5% YoY to S$199m, with staff costs falling 4.9% YoY to S$85.8m, on the back of a decrease of 7.9% in headcount (excluding new acquisitions) as at end-November. Average newsprint charge-out prices have been increasing over the last 2 quarters (from US$484 to US$490), and we believe this should exert some pressure on margins moving forward. This quarter also saw a gain of S$5.9m being registered from the dilution of interest on Mindchamps’ IPO listing, as well investment income of S$12.4m comprising primarily divestment gains. All in, PATMI grew 32.1% YoY to S$60.4m.

Starhub

Still not enough to reach the stars

■ We like the prospects of StarHub’s FNS business, with growth to be accelerated by the recent acquisition of ASTL and the proposed purchase of D’Crypt.

■ However, we still expect EBITDA/core EPS to fall 12%/36% over FY16-20F as FNS growth will not be able to offset mobile, pay TV and broadband revenue declines.

■ More FNS-related acquisitions are possible but any potential boost to earnings will be limited by how much it can invest, amongst other factors.

■ The degree of mobile competition after TPG’s market entry will still likely have a bigger impact on StarHub’s earnings outlook in FY19-20F.

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Oversea-Chinese Banking Corporation (OCBC SP)

4Q17 Results Preview: Cleaning Up Legacy NPLs With Transition To FRS 109

We expect OCBC to report a solid set of results with NIM expansion of 4bp yoy and 16.7% yoy growth in fees. Management will utilise the opportunity afforded by the transition to FRS 109 to clean up its legacy NPLs. We expect OCBC to recognise additional NPLs of S$784m and write-back surplus general provisions of S$392m. NPL ratio is expected to increase by 36bp qoq to 1.62% but credit cost is contained at 35.3bp. Maintain BUY. Our target price is S$14.88 based on 1.58x 2018F P/B.

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