Singapore Press Holdings (SPH)

[cfa]

With the declining trend in its media business, i have always held the view that investors are valuing SPH's business at a high premium and overall at a share price of 3.57 now, i think it is overvalued..

Let me try to give my views for its valuation below...

Based on its latest financial statement, its media earned profits of about 33m and property about 39-40m. Due to some impairment losses in its media, i will be generous, i will take it that its long term recurring profits for media is around 40m per quarter

Extrapolating, its profit for media and property will be around 160m each. Due to the fact that earnings have been declining over the years for media, i would attach it with a lower p/e of 12, so i would value it around 1920m. For its property segment, i will value it more generously at p/e of 16 and so around 2560m, so total of 4480m, with a share count of around 1.6b, it works out to $2.80 per share compared to its current price of $3.57.

Actually, my total annual estimated profits of 320m for property and media is very generous because it is before tax and non controlling interests. For comparison, for full year 2015, SPH's total profits to shareholders is actually 321m and it dropped to 265m for full year 2016. In fact my estimate for full year 2017 will be lower than 265m.

I think SPH is way too overvalued and i wouldnt touch it for anything above $3.

well, the market is taking SPH's declining profits in its media business more seriously now

It seems advertising in the newspapers is something very '' outdated '' now a day ?