Long-Term Investment: SPH

Recommended Type: Long-term Investment
Sector:
Manufacturing; Printing and Publishing

Background Information:
Singapore Press Holdings Limited (SPH) was incorporated in Singapore on 4 August 1984 under the Companies Act as a public company. It was formed as the new holding company to effect the merger of Times Publishing Bhd, Straits Times Press (1975) Ltd and Singapore News and Publications Ltd. These companies became wholly-owned subsidiaries of SPH but in 1988 Times Publishing Ltd was demerged.

Today, SPH is the leading news and information provider, offering quality content for print, Internet, TV and radio. It is licensed to publish 14 newspapers in the four official languages and six lifestyle periodicals. Everyday, SPH publications reach some 90 per cent of adults in Singapore while online publication of its six main dailies enjoy about 120 million pageviews a month.

SPH has ventured into the broadcast medium and operates two popular free-to-air TV channels. History was made with the introduction of English and Chinese TV news broadcast which leverage on the brand name and resources of SPH’s print newsrooms, turning it into one of the few newspaper publishers in the world to have a fully-integrated newsroom that comprises print, TV and web.

In addition to its core business activities, SPH holds stakes in MobileOne, mobile telecommunications service provider, and in StarHub, a info-communications company offering cable TV, Internet as well as fixed-line and mobile telephone services. SPH is also a major property player owning Paragon and Promenade, two prime retail / commercial buildings on Orchard Road.

Leaders:

Chairman: Dr Tony Tan Keng Yam
-Deputy Chairman and
Executive Director of the Government of Singapore Investment Corporation Pte Ltd
-Chairman of the National Research Foundation
-Deputy Chairman of the Research, Innovation and Enterprise Council
-Chairman of the Ministry of Education’s International Academic Advisory Panel.
-Patron and advisor to several other civic and charitable organisations
-Deputy Prime Minister and Co-ordinating Minister for Security & Defence
-Helmed the Finance, Trade & Industry, Education and Defence ministries
-Chairman and Chief Executive Officer of Oversea-Chinese Banking Corporation


CEO: Chan Heng Loon Alan
-Chairman of the Urban Redevelopment Authority, SP PowerAssets Ltd and
PowerGas Ltd
-Serves on the boards of Singapore Power Ltd, MediaCorp Press Ltd, MediaCorp TV Holdings Pte Ltd and Singapore Press Holdings Foundation Limited
-Member of Business China and Casino Regulatory Authority of Singapore
-24 years’ experience in the civil service, spanning the Civil Aviation Department, Ministries of Home Affairs, Defence, Foreign Affairs and the Prime
Minister’s Office
-Permanent Secretary, Ministry of Transport

Secretary: Ginney Lim May Ling; Khor Siew Kim

Data (as of 2008-03-31):
Current Ratio: 3.098
Closing Price (as of 2009-03-11): $2.38
Debt to Equity Ratio: 0.281
Dividend Cover: 1.011
Dividend Per Share SGD 0.270
Dividend Yield: 9.926%
Net Tangible Assets Per Share: SGD 1.279
Price Earnings Ratio: 10.074
Return On Equity: 20.941%
Return On Total Assets: 13.884%
Market Capitalization: $3.91044B
Net Profit: $0.437B

Reasons to Buy:
a) Owes little debt
b) High dividend per share
c) High RoE
d) Management in favourable position
e) Possible greater share prices following more investors to fuel further growth
f) Shares less volatile due to high market capitalization
g) Current Financial Crisis could lead to increase in unemployment and rising concerns about the recent economic situation. Newspapers and magazines serves as a means for people to look for new jobs as well as be updated about the latest economic situation economy and thus, there will be an increase in sales of these materials resulting in the increase in profits and subsequently the share prices of SPH.
h) Government funding will ensure that company will not be greatly affected by the dip in the economy as compared to private companies
i) Multiple sources of income ensures that economic crisis today not affect adversely financial status of company when it hits a specific sector
j) Leaders (Chairman and CEO) have good reputation and possess much experience in leading corporations and being in leadership and board roles in various major companies, hence being able to help company sign new contracts and take up various profitable projects
k) RSI below average = Undervaluation during current economic crisis = Possible huge profits through long-term investments

Sources:
www.sgx.com
www.cimbinvest.com
SPH 2008 Annual Report

Done By:
Alvin Ong
Lee Zi Jian
Lester Mok
Irvin Ho