Cory Diary : Information familiarization work of SPH 2021-0510

SPH 1st Half '21

119M Operating Profit (16% Increase from last year ).

The increase is smaller if we consider more than 6M divestment gain (Buzz), and 3M lesser retrenchment cost therefore lower staff cost. There is also lesser interest cost about 1.6M, and about 700k foreign exchange gain which I am not exactly sure count towards operating profit. However there is a statement which indicate it is from "1(a)(ii) Notes: Profit after taxation is arrived at after accounting for:" which are there misc saving/cost.

SPH has net asset of 5.2B after account for 3.5B of borrowing. If we use gear standard to measure gearing, is very roughly 40%. Net Cash equivalent about 959M.

Shares Structure

As at 28 February 2021, the Company had 1,591,512,137 ordinary shares,

16,361,769 management shares

On a fully diluted basis 1st half earning is 5 cents. NTA increase significantly to $2.24 from $2.06 at group level.

Media

".. Media advertisement revenue fell by S$46.5

million (27.9%) with Newspaper print advertisement revenue declining by S$36.3 million

(28.8%), and magazine advertisement revenue declining by S$8.5 million (55.5%) partly

due to the cessation of the operations in Malaysia. ...

... accelerated by the impact from the Covid-19

pandemic. Pretax loss of 9,7M if we exclude JSS.... "

SPH to restructure media business into not-for-profit entity

Transfers all media assents including leasehold New and Print centers, Digital Investment asset and Intellectual property rights and publications. 80M cash and 30M of SPH shares/ Reits units. That's what I got from listening to Chairman from you tube.

Q&A

The two questions by CNA digital in the press conference are quite interesting.

The first is about editorial integrity. Even at today structure, the gov has close reach if they find something not ok with SPH being a profit enterprise. So this is really puzzling question as she seems to indicate today SPH put advertisers more.

The second question is on earlier retrenchment has failed and who should be accountable. In corporate management, is not unseen that poor performing unit can undergoes many rounds of cost cutting. And if still not enough, it can be closed or sold. So to mention about accountability is insinuating something else which I find not really fair and unfortunate. Even if Media finally spinoff the cut earlier is still necessary as some departments like LBY said on advertorial side will be permanent and investment can be channeled to elsewhere.

In both questions, that Journalist imo makes two serious mistake. Did she put journalists of SPH lower and using SPH conference to judge SPH CEO that earlier retrenchment is unnecessary and he needs to bare the consequences ? Frankly she has no right. Is up to the management board.

All the others questions by other journalists are very professional. This also attest to us that SPH management board is right to spinoff Media to ensure high quality of journalism continues to remain despite business difficulty.

The CEO response was not so gentleman but he was hit below belt. Key takeaway, both the Chairman and CEO pretty aligned in the direction of where SPH should go. And I also find LBY performance impressive. I said my piece.

Investment

The spinoff is to cut losses quick as likely the advertisers won't be coming back unlike Retail Malls. One my think there is potential the stock price might reflect quick rebound like many turnaround. However this spinoff action sounds more like saving SPH rest of businesses rather than unclipping their wings since most property counters today are below NAV valuation significantly.

Cory

2021-0509

Articles in this Blog is personal take and educational purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.