SPH looks to property assets to buoy revenues
It is hunting for purpose-built student accommodation assets.
Singapore Press Holdings (SPH) is expected to lean into property assets amidst decline in profits from weakening media business, according to OCBC Investment Research.
It is expected to look out for more purpose-built student accommodation (PBSA) assets, building on its portfolio assets under management (AUM) of over $600m. However, the cap rates for these assets in UK has been noted to be compressing
The group also tied up with Japanese asset manager in setting up a fund focused on aged care and healthcare assets in Japan, with SPH to contributing up to $50m in seed equity. Its residential property in Bidari, Woodleigh Residences, has been noted to be 20% sold as at 31 August, with an average selling price of $1,900 psf.
Still, SPH’s profit after tax and minority interests (PATMI) is expected to decline to $161.3m in FY 2020 then recover to $171.9 FY 2021.
“In our view, the group’s media business outlook remains challenging, and we believe it is still too early to call the bottom on this segment,” the report wrote.
Its PATMI fell 23.4% YoY to $213.2m in FY 2019, attributed largely from a lack of investment income after the divestment of its Treasury & Investment portfolio. Its newspaper ad revenue declined 12.4% YoY in FY18 to 13.9% in FY19 from a weakness in the Classified segment.
The group is also expected to have modest net cost savings in FY 2020 from incurring an estimated $8m from retrenching 5% of its staff by Q1.