Singapore Press Holdings' print revenue could fall by 10% in Q3

Its page count was still down by 12.5%.

The page count of Singapore Press Holdings’ (SPH) The Straits Times in Q3 was down 12.5% from last year, UOB Kay Hian revealed.

A report said that the Recruit, Classifieds, and Display ads saw declines of 10%, 15%, and 12% respectively. “Except for Display ads, the 3QFY2018 decline represented an improvement from that seen in both the same period last year (3QFY2017) and the prior period (2QFY2018),” said UOBKH analyst Foo Zhi Wei.

Foo noted that the page count decline was softer compared to that in the previous quarter (12.7%) and in the previous year (13.7%). “The figure reflects a QoQ improvement, which is largely expected given that the third quarter is traditionally strong,” he added.

Meanwhile, UOBKH observed that their calculated correlation between physical page counts and ad revenue are falling. “This has weakened since 1QFY2018, as noted by the smaller-than-expected revenue decline vs the page count decline. This suggests that there may be underlying reasons such as higher ad density or more full-page ads that our simple page count does not capture,” Foo said.

Another reason could be the integrated marketing approach SPH has taken for its advertising, which presumably is driving higher take-ups, he added.

Still, Q3 could see a print revenue decline to 9-10% and dent whole-year total by 10-11%.

UOBKH added that their assumption currently stands at a 13% YoY decline. “A revision upwards to a 10-11% decline translates to FY2018 earnings of $216m-$219m (+3-5% to our current estimates),” Foo said.

In the meantime, future property acquisitions can potentially offset media earnings weakness in the short-term and provide share price support.

“Whilst this is a step in a more positive direction, we remain sceptical about the potential uplift given the property cycle in the target markets. Over the longer-term, SPH needs to fully address the short-comings of the media business in order to justify an earnings recovery and spur a re-rating,” Foo concluded.