Disruption of SPH's media business spills over to 2018

But its 13.9% revenue decline is stabilising on a quarterly basis.

For the first quarter of 2018, Singapore Press Holdings' (SPH) revenue for its media segment continued to fall 13.9% YoY, led by a decline in display, classifieds, magazines and circulation.

However, CIMB Research said that a deeper look at its segmental numbers revealed that such YoY decline has tapered off slightly, with stability on a QoQ basis.

Display ads’ revenue rose 4.2% QoQ, thanks to a broader economic recovery in Singapore and spillover effect from improved sentiment.

CIMB analyst Ngoh Yi Sin said, "Whilst such an economic recovery could be sustained in the near-term, we think SPH needs a stronger solution to its media disruption before a share price re-rating can take place, to which management stated that it plans to roll out new products."

Media revenue is still at risk of falling by a gradual pace of 4-6% YoY, compared to a 7-13% YoY drop over 2015 to 2017.

Here's more from CIMB Research:

Apart from falling ads, the challenging media environment also took a hit on SPH’s books, as it recorded a series of impairments on its media investments since 2013, totalling $137m YTD.

Whilst we saw an increase in the value of intangible assets in 2017, this is mainly due to $79m goodwill from the acquisition of Orange Valley Healthcare (OVH) in 2017.

We think the risk of impairment of this asset is low at this juncture, given the stable healthcare asset, barring any adverse regulatory change.

In 1Q2018, we saw a reversal of this trend, with SPH recognising a total gain of $15m and minimal impairment of investments.