In the thread I started in Sgforum introducing my blog, there have been many discussions on SPH pertaining to its growth outlook, potential dividends payout and fair value. Some forummers wanted to cut loss when SPH drops to $3.90, to my surprise. Below are some excerpts of the postings:
Some opinions on SPH:
I have to disagree with that (on my outlook). A large number of my friends do not read the local papers because they feel that its bias and its information is outdated. Articles inside are also not creative. Instead, they would rather subscribe to wall street journal or some other papers. They only tune in to the TV news for local news. If I remember correctly, take a look at the latest circulation numbers. You will see some dropping numbers. The only thing that is propping SPH now is Sky Eleven and Paragon.
If you have analysed SPH results fully, you should realise that their advertisements revenue has been steadily growing instead of declining. For YTD 2008, the ad revenue has grown by 8.2%, while in 2007 the growth for ad revenue is 6.8%. If you have analysed SPH results fully, you would realise tat SPH valuation ain't tat expensive as most people thought to be.
Other properties in balance sheet: $481m, PS $0.30 (includes Toa Payoh News Centre, Jurong Print Centre, Hong Kong Lippo Tower unit, 3 properties in Nassim Rd, etc)
Cash and Investment portfolio: $1.256bn, PS $0.79
Debt: $574m, PS $0.36 Hence at the share price of $4, after stripping off all the assets above and adding debt, the balance is $1.99.
For me, I am not an aggressive investor and prefer steady returns, liquidity (for bargain hunting) and relative little volatility with a 6% or more target return on investment. Although I can't beat the inflation, technically, I make do with less by spending lesser. In fact, being more prudent these days with spending has allowed me to save more. Hence, I still buy SPH for the predictable returns and a piece of mind. Btw, SPH bought slightly more than 1m of its shares from the open market when its price fell below $4 yesterday. I am expecting some directors to pick up the stock soon. I remembered a few directors picked up SPH last year at an average price of $4.50.
Hi all, I know I'm a little late on this particular discussion, but I would like to share my opinion having worked for 9 years in the advertising/journ industry. I own a share in a pte ltd creative agency. From an investment perspective, SPH and all media publishers are losing their economic moat. In addition, advertising as an industry has lost more than 40% of its power over the last 10 years because of the rise of PR. I am personally not confident that SPH will be able to sustain good growth in the long run. It's primary market is saturated and under heavy assault from electronic media. I'm not going to put my money on mass media publishing ever. I'm not even going to put my money on advertising. The ad industry is not growing much at all. It will continue to be profitable for the company, but I think shareholders looking for growth will be disappointed. Just my insight into my own industry.
There are also many replies to other views on SPH not shown here, but from what I see, everyone has his/her take on SPH. The reason is because different people are analyzing SPH from different perspectives. Of course this is not exclusive to SPH but to any other stock listed in the world. This is also the main reason why people buy and sell at different prices! It is impossible everyone sees SPH the way I look at it, or everybody is bearish/bullish on the same stock. Or else, everyone will be buying and selling it at the same time! However, judging from the price trend, it seems that SPH is losing its appeal to investors.
Why is this so?
Some random reasons include:
SPH had a poorer YoY results, due to M1 and Starhub capital distribution the previous year and poor equities return from its investment portfolio.
The general market is really bad for equities. Component stocks like NOL, Cosco, Citydev, SGX, Yangzijiang has retreated 50% from their peak. Other more established blue chips like DBS and UOB has retreated 30% from their all time highs (last year). Compared to SPH, it’s Dec 07 high of $4.82 to recent low of $3.97, it has only retreated 17.6% outperforming the decline of STI index of 25% from its Oct 07 peak. Shrewd investors would rather invest in stocks that have declined by a larger margin than steadier stocks like SPH.
As interest rates are expected to rise across the world, yields for long term bonds are on the uptrend. Dividend stocks prices will take a beating as investors will demand the same risk premium spread to compensate them for investing in equities over bonds.
Example: Assuming risk premium is 3% above the 4% 10 year bond yield, investors will only purchase dividend stocks that are yielding 7%. With dividends payout unchanged, prices of these stocks will have to come down to yield investors the 7%. This explanation can be used to explain the price decline of Singpost, Starhub, SPH and other dividend stocks.
The rising interest and awareness of REITS, shipping trust and other high yielding instruments perhaps also contribute a little to the loss of appeal for SPH.
As I have mentioned earlier in my post on Sgforum, my aim for investment is only a modest 6% per annum or a cash flow of $1000 monthly. So far, I am able to achieve the objectives from trading blue chips and collecting dividends. One thing to note is that dividends usually pay me better than capital appreciation. SPH fulfills most of my criteria listed here: http://sgbluechip.blogspot.com/2008/05/can-i-invest-in-this-business.html and hence I will again be buying more on dips if there are no better alternative to invest my cash.
The current market is worth a second look at current gloom and doom. We all know that the bear market usually doesn’t last more than 2 years. Some end in 8 months. As long as we stay invested and hold on to fundamentally sound companies, profits and dividends will increase ultimately. It will be too late to buy by than and tell yourself, “ Damn.. I should have bought earlier!”