Analysts from CGS-CIMB Research and DBS Group Research have maintained their &ldquo hold&rdquo calls on Singapore Press Holdings (SPH) after the publisher and property investor reported its full-year results on Oct 13.

 

For FY2020 ended Aug 31, 2020, SPH reported a loss of $83.7 million reversing earnings of $213.2 million a year ago, largely caused by a non-cash fair value charge of $232 million on its properties due to the impact of Covid-19.

 

The group also declared a final dividend of 1 cent, bringing total distribution per share (DPS) to 2.5 cents for FY2020, which fell short of CGS-CIMB analyst Ngoh Yi Sin and DBS analysts Alfie Yeo and Andy Sim&rsquo s expectations.

 

The pandemic disrupted the group&rsquo s major business segments, including its media business, which was affected by the &ldquo collapse in advertising&rdquo , according to SPH CEO Ng Yat Chung.

 

On that, CGS-CIMB&rsquo s Ngoh has slashed her target price to $1.10 from $1.35 previously, which is pegged to &ldquo 30% group discount (previously 25%) and includes 21 cents per hour worth of media business&rdquo .

 

For Ngoh, her sum-of-the-parts (SOP)-based target price is pegged to &ldquo 30% group discount (previously 25%) and includes 21 cents per hour worth of media business&rdquo .

She has also cut her earnings per share (EPS) estimates for FY2021 to FY2022 by 11.1-18.4% to reflect &ldquo further pressure on media earnings and a gradual recovery in retail malls&rdquo .

 

Despite the red ink, Ngoh thinks all is not lost for the group yet, as most of the negative news have been &ldquo largely priced in at 0.45x FY2020 price-to-book value (P/BV)&rdquo .

 

DBS&rsquo s Yeo and Sim have similarly cut their target price on the counter to $1.09 from $1.26.

 

Like Ngoh, they have also pared down their earnings estimates for FY2021 and FY2022 by 7-18% as they expect the company&rsquo s weak advertising expenditure (adex) to persist till FY2021 with the slow recovery of Singapore&rsquo s GDP.

 

Nonetheless, the analysts say they see SPH&rsquo s property arm driving growth in earnings in the longer term, which may contribute to better margins for the group in FY2022.

&ldquo We expect UK purpose-built student accommodation (PBSA) to drive earnings growth in FY2021F. We value the core newspaper and magazine operations at 16 cents/share based on discounted cash flow model, properties and other investments at $1.89, and net cash and investments at -96 cent,&rdquo they say.