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Singapore Press Holdings (SPH SP) 1QFY20: Earnings In Line But Not Finding A Bottom Yet
SPH’s 1QFY20 core net profit of S$46.8m is in line with our expectations. Media ad revenue continued its decline, down 17% yoy, and does not appear to be abating. While PBSA acquisitions have grown SPH’s asset base to a sizeable extent, we remain wary of the decline in group core operating profit (-21% yoy). Maintain HOLD with a lower SOTP-based target price of $2.22. Entry price: S$2.00.
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Telecommunications Still a Tough Call
Maintain NEUTRAL. The sector’s risk-reward profile appears largely balanced in our view, with stocks having priced in the prospects of elevated competition over the past two years from new entrants and structural revenue/EBITDA pressures. The sector’s 1-year forward EV/EBITDA at -1SD is fair, supported by telcos’ decent yields of >5%. Our preferred pick remains Singtel for its earnings diversity and dividend certainty, which should augur well in a slow-growth and macro-infused environment. Improving tariff dynamics in India/Indonesia are its key re-rating catalyst.
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Check out our compilation of Target Prices
