SPH-FAIR VALUE ESTIMATION

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SPH-FAIR VALUE ESTIMATION

Post by Admin on Wed Apr 12, 2017 3:18 pm

SPH announce its 2017 Q2 result today. Sales revenue continue to drift lower by 8.1% to SGD238 million on a year on year basis and the below show the breakdown of its Q2 sales revenue in details.

                                 
Media                          S$168 mil (2017 Q2) - S$191 mil (2016 Q1) - Down 12%
Property                      S$62 mil (2017 Q2) - S$61 mil (2016 Q1) - Up 1%
Others                         S$8 mil (2017 Q2) - S$7 mil (2016 Q1) - Up 7%

from the above statistic, it clearly show that SPH core revenue, advertising income is still weakening. As Singapore is an export led economy, it is only when export demand begin to lift domestic consumption before companies will increase their advertisement budget, hence further monitoring are still required before any turnaround conclusion to be formed.

Operating profit before interest, tax, depreciation and amortisation fell approximately 20% to SGD74 mil on a year on year basis and operating profit margin further softened to 31.1% as compared to 35.5% in the corresponding period. Debt ratio slightly increased to 39.5% versus 36.1% in 2016 Q2. Although leverage has increased, it is still considered low and healthy. Operating profit cover about 11 times its interest cost, hence SPH ability to service its interest obligation remain strong. Overall the company continue to maintain a strong balance sheet which will provide adequate buffer to its operation while pending for a turnover around in advertisement demand.

My estimated fair value currently stand at SGD3.60 and ideal entry price at SGD2.52 or below. Thank you

Admin
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