SPH loses advertisers and investors as its net profit plunges by a hefty 25%

Singapore Press Holdings (SPH) is losing the interest of advertisers and investors as it 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.

Just a day later, 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 today, 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.

Sources like the Nikkei Markets have said that the receding investor interest in SPH highlights the organisation’s “struggle to find direction outside its core business.”

These other businesses SPH has forayed into include its recent takeover of M1 together with Keppel Corp and its business providing services to the elderly through groups like the Orange Valley Healthcare nursing homes chain.

SPH has also sold wine to its newspaper subscribers and has invested in overseas properties such as its AUD $206 million investment into Figtree Grove Shopping Centre in Wollongong, Australia and its expanding U.K. student accommodation investment.

Nikkei Markets says that SPH’s “diversification attempts have yielded mixed results even as the pressure on its media business has intensified.”