SG: MARKET PULSE: SPH, Singapore Economy (14 Oct 2013)

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 4.14

MARKET PULSE: SPH, Singapore Economy

14 Oct 2013

KEY IDEA Singapore Press Holdings: Twin initiatives for growth and cost savings Summary: SPH reported FY13 (ending 31 Aug) PATMI of S$431.0m - down 25.0% - mainly due to a lower fair value gain on investment properties and a S$40.4m increase in the "other operating expenses" item. Accounting for one-time items, core PATMI is estimated at S$348.9m, which constitutes 96.5% of our FY13 forecast and is judged to be mostly in line. In addition, a final dividend of 15.0 S-cents per share was announced. Management reported that it will set up a S$100m New Media Fund to invest in media-related businesses and has also began cost-saving intitatives to generate savings of S$19m per annum. We see management's twin initiatives for growth and cost savings to be key positives and would look for execution and preliminary results over 1HFY14. Maintain HOLD with a fair value estimate of S$4.14. (Eli Lee) MORE REPORTS Singapore Economy: 2013 GDP growth forecast kept at 2.5-3.5% Summary: According to advance estimates from the MTI, the Singapore economy grew by 5.1% YoY in 3Q13, much better than the street's expectations of 3.8% growth, and also better than the 4.2% growth seen in 2Q13. But on a seasonally adjusted, annualised basis, the economy contracted by 1% QoQ, reversing 2Q13's 16.9 % surge. Manufacturing output fell by 3.4% QoQ, reversing the 33.5% expansion in 2Q13, while construction contracted by 8.8%, compared to 2Q13's 20.9% growth, mainly due to weaker public sector construction activities. Finally, services expanded by 1.0% after 2Q13's 12.3% rise; the financial services sector shrank as equity and foreign exchange market activities fell on tapering concerns by the Fed and tensions in Syria. The MTI has kept Singapore's 2013 GDP growth forecast at 2.5-3.5%, and barring unforeseen events, 2014 is likely to see similar growth. Meanwhile, the MAS has kept the slope and width of the S$NEER policy band unchanged, as well as the level at which it is centred. This takes into account the balance of risks between external demand uncertainties and rising domestic inflationary pressures. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks climbed on Fri, adding to Wall Street's largest single-day percentage gain since 2 Jan, after the Associated Press reported House Republicans were proposing a deal that would avert default and end the 11-day-old government shutdown. - The Singapore LNG terminal has started to expand beyond its core business by providing its first vessel cool-down service for liquefied natural gas ships. - AusGroup expects to incur a net loss in 1QFY14 due to cost overruns, delays in the commencement of new contracts and restructuring costs. - Del Monte Pacific is acquiring the consumer food business of privately-owned Del Monte Foods of the US for close to US$1.7b. - Top Glove Sdn Bhd, the parent company of Medi-Flex, is seeking voluntary delisting of the Catalist-listed maker of rubber gloves. - CH Offshore Ltd has commenced legal proceedings in London against PDV Marina and Astilleros De Venezuela, for a claim relating to outstanding charterhire totalling ~US$56m.