The Straits Times (ST) seems to be promoting Singapore Press Holdings’ (SPH) stock even as SPH’s net profit and shares dropped. ST is fully owned by SPH and is the media organisation’s flagship English-language news publication.
In an article on stocks to watch, published on Wednesday (10 Apr), ST pushed SPH stock. The publication wrote that SPH is among five organisations that “saw new developments that may affect trading of their shares on Wednesday” and that SPH “reported positive momentum across all its business segments – media, property, digital and aged care – even as it turned in a smaller profit for the second quarter.”
Just a day before the article was published, SPH revealed on Tuesday that its net profit for the quarter that ended in February fell by a hefty 25.7 per cent.
SPH’s net profit of SGD $29.7 million was significantly lower than the S$52.95 million net profit analysts polled by Refinitiv Financial Solutions earlier estimated the organisation would record.
On Tuesday, SPH revealed that the interim dividend of 6.0 cents per share in the same quarter a year ago has dropped to 5.5 cents per share in this last quarter. Its annual dividend has also fallen by a whopping 38 per cent between 2014 and Aug 2018.
A day later on Wednesday, SPH shares dropped by 2.4 per cent, which prompted OCBC Investment Research to keep its “hold” rating on SPH shares. OCBC Investment Research however added that it would review its fair value estimate of S$2.55. By midday on Thursday, shares of SPH were down 2.46% and was trading at $2.45.
The organisation’s dividend yield, which used to be its main draw, is now at 3.6 per cent which is lower than what other groups like SingTel and DBS Group offer.
SPH also recorded a notable 10.1 per cent decline in media revenue. The organisation claimed that this decline was partly due to the shorter festive advertising window between Christmas and Chinese New Year.
While SPH claimed that its newspaper digital ad revenue has risen by 15.1 per cent compared with a year ago and shows encouraging growth, the organisation seems to be earning more from property than its core business of media operations.
SPH’s media operations constitutes 60 per cent of operating revenue. Even though only 40 per cent of its operating revenue comes from other businesses, two-thirds of profit comes from its property investments.