Why SPH needs to diversify revenue streams

Poor performance from media segment will continue to drag its yields.

The recently concluded quarter was another dismal period for Singapore Press Holdings, as it is continuously battered by the harsh blows of poor media business performance. 

According to OCBC Investment Research analysts Carmen Lee and Eli Lee, there was a sizeable $37.8m impairment charge related to SPH's magazine business.

"Excluding the impairment charge, we note that group recurring earnings would have fallen by $17.1m or 19.2% and deem this quarter’s results to have missed our expectations," the analysts said.

More so, media revenues fell by 15.7% YoY as both advertisement and circulation revenues fell 18.7% and 10.6% YoY, respectively.

This could lead to the group to find new streams of revenue to buoy its flailing media business.

SPH found hope in its property segment as it recorded a fairly stable results with revenues up 2.0% YoY due to the higher rental income of its retail assets.

The analysts noted that SPH continues to exercise discipline on cost controls, excluding impairment charges, total costs for 3Q17 came to $193.6m which is some 6.7% lower YoY.

"The management team also indicated that they are actively pursuing growth opportunities to diversify revenue streams with their recent acquisition of Orange Valley Healthcare and the recent winning tender for a mixed site at Bidadari with JV partner Kajima Development Pte Ltd," the analysts stated.

Additionally, SPH has completed the sale of 701Search on 30 June 2017 and expects to recognise a profit of around $150m from the divestment in the next quarter.

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