It has reported a set of decent results:
Revenue had exceeded $1.3 billion, a record high.
Operating profit grew 17.5 per cent to $502 million.
Due to a 67.3% dip in investment income together with an impairment charge for SPH’s investments in associates, net profit decreased 12.4% to S$437 million.
It is worth noting that the dividends paid out will be tax exempt, compared to the usual 18% company tax the previous year. As such, dividend payout actually increased by more than 1 cent this year.
I have adjusted my expectations of dividend cut for FY 09. However, it is likely SPH will at least retain its 27 cents dividend payout for FY 09.
At last traded price of $3.5, the yield is 7.71%.
Take note that SPH has increased its dividend payout for 5 consecutive years. If the economy worsens, government might even cut corporate taxes to support the economy. However, I am not betting on our government to help, but newspapers being a near staple necessity will continue to earn a decent recurring income for FY 09.
Sky@eleven will continue to recognise income till 2010 and there should be larger amount of profit recognition in FY 2009.
SPH has a quick ratio of 3, a rather healthy debt ratio especially when credit is tight now.
Going forward, I will continue to hold on my 49 lots of SPH dearly and reinvest the dividends received.
For those who have sold down the stock due to fear and panic, I think it is rather overdone.
For those who have bought more SPH today, congrats! The dividend payout is likely to give you a great Christmas! I am unable to join you as my cash at hand is too tight!
SPH will XD on 09/12/2008, the dividend will be paid on 23/12/2008 (eve of Christmas Eve).