KUALA LUMPUR: Singapore Press Holdings (SPH) is likely to cut its dividend sharply this year as its results for the third quarter (Q3) ended May 31 were below expectations, said UOB Kay Hian.
The research house said in a report that the net profit of S$52.7mil (RM156.2mil), down 46% year-on-year (y-o-y) on an unexpected impairment of S$28mil (RM83mil) for its magazine business.
Excluding one-offs, core net profit fell 20% y-o-y to S$80mil (RM237.2mil).
For the nine-month financial period, the net profit of S$188.1mil (RM557.7mil) represented 60% of UOB Kay Hian’s full-year forecast.
“The result was impacted by a 7.1% decline in media revenue, a 22% decline from investment income, as well as S$28.4mil (RM84.2mil) in impairment charges mainly for the magazine business,” it said.
UOB Kay Hian saidS PH’s media business continued to languish, with the recent cover price hike providing a minimal uplift.
Media business revenue was down 7.1% y-o-y, reflecting continued business deterioration. The decline was led mainly by a S$15.7mil (RM46.6mil) drop in advertising revenue, down 9.2% y-o-y.
The property segment, however, reported stable revenue of S$60.3mil (RM178.8mil), up 1.6% y-o-y on higher rental and services revenue.
UOB Kay Hian said SPH was expected to cut its dividend payout for this financial year to 16-17 cents (47.5 sen-50.5 sen), representing a 15% to 20% decline from 20 cents paid for the preceding year.
This assumes up to 100% payout, rounded down to the nearest whole number as SPH traditionally does.
UOB Kay Hian, however, added: “It is possible that SPH manages the situation by paying higher than its traditional 100% payout ratio. A larger-than-expected property revaluation gain will also help soften the dividend cut.”
The research house is maintaining its Hold call with the target price revised downwards to S$3.80 (RM11.27) from S$3.90 (RM11.57) previously.
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