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My view only
Research companies have always look at the glass as 1/2 empty.
A one-time gain/Special Div and 9% earning decline for the next 3 year would mean chopping the hen that lay golden egg.
Would be interesting to see how the reit restructing, pricing of the core media biz and operating cost are managed.
Doubt the board would be able to justify the -ve sum move as projected by UOB KH, but its track record of paying super high price (for ClimentiM) do not rule out that possibility.
Octavia ( Date: 14-Mar-2013 08:39) Posted:
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SPH earnings likely to plummet 9% over next three years
Equivalent to a $30m loss, forecasts UOB.
In its latest SPH company report, UOB Kay Hian predicted that the publishing giant will suffer a 9% profit decline for FY13-15, a dip that includes a S$10m net fee from REIT property management to offset the massive 70% decline in earnings contributions from Paragon and Clementi Mall. The research firm also paints a grim prospect for annual projected DPS and dividend yield, which will both also fall over the same three-year period.
Here's the full report from UOB Kay Hian:
We attempt to paint scenarios for SPH’s retail REIT (SPH REIT). We estimate our SOTP valuation could be enhanced marginally by 21 cents/share (+3.7%) on divestment gains. The real boost to share price would be a large special dividend as SPH could reap cash proceeds of up to S$1.46b (90 cents/share) if its stake in SPH REIT is reduced to 30%. As details are still lacking at this juncture, we maintain our HOLD call and target price of S$4.30, with an entry price of S$4.00.
Potential gains of S$1.520b. We estimate potential divestment gains totalling S$1.520b (94 cents/share) - a) S$1.276b from the injection of Paragon and Clementi Mall into SPH REIT, and b) S$244m from divestment of a 70% stake in SPH REIT on the assumption that SPH would hold a 30% stake in the REIT.
Could reap cash proceeds of up to S$1.46b (90 cents/share). The amount of cash proceeds received by SPH from the divestment of 70% of SPH REIT would depend on whether it would undertake: a) an offer for sale (OS), b) a distribution in specie (DS) to its shareholders, or c) a combination of an OS and a DS. We estimate total cash proceeds of: a) S$1.46b for an OS of the entire 70% stake, b) S$730m for a 50:50 OS and DS, and c) zero cash if the entire divestment is by DS to SPH’s shareholders.
FY13-15 earnings likely to fall 9%. Paragon posted a net profit of S$64.3m while Clementi Mall made a net loss of S$2.4m in FY12. Factoring in a net fee of S$10m from REIT property management to partially offset a 70% decline in earnings contributions from Paragon and Clementi Mall, SPH’s FY13-15 net profit would likely fall by about S$30m (-9%) with our annual projected DPS correspondingly shrinking from 22 cents to 19 cents. Dividend yield would fall from 5.1% to 4.4%.
A good chance of a special dividend. We believe SPH would likely utilise part of its divestment gains (94 cents/share) for a special cash dividend. This would also be a capital reduction exercise to partially restore ROE.
Maintain HOLD and target price of S$4.30. Our target price of S$4.30 is set at a 20% discount to our SOTP valuation of S$5.39/share. Divestment gains could enhance our SOTP valuation/share by 21 cents, but the main attraction lies in a special dividend payout which should boost share price
Price will go up soon.
If you look at 2 cases - Keppel Corp when they establish K Green Trust and CWT when they establish Cache reit, both price increase a lot after announcement.
Any comments from any Sifu?
Not much change.
Still strong!!!
crashburner ( Date: 13-Mar-2013 09:30) Posted:
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Make sense ?
As management has announced REIT spin-off on the cards, but not likely in the near future. SPH has commented that it will spin off its property segment into a REIT but did not indicate a timeframe. Maybank Kim Eng believe this could take place when its property segment is operating on a more scalable level.
But I think can keep for its attractive annual dividends of 24S¢ a share which was paid out over the past two years, amounted to a payout ratio of above 90%. It is likely to issue dividends of 24S¢ a share for FY13 as well, which translates to a 5.9% yield.
Octavia ( Date: 12-Mar-2013 22:22) Posted:
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Will SPH share tumble when the Reit is set up?Going forward their main core business that is printing is facing shrinking business activities.
My friend opinioned that when REIT materialize, SPH will likely be giving one-off special dividend of around 30cents unless SPH has other use such as buying other properties. Both special dividend or other use of the cash make SPH very attractive. Target price is 5.00.
He also said at SPH current price of 4.48, dividend yield is still higher than Starhub. So it is very attractive. (Starhub is his benchmark of blue chip with good dividend.)
What you all think? I am vested.
Closed at 4.48 today!!!!!
$4.50 coming soon!!!!!
crashburner ( Date: 12-Mar-2013 15:55) Posted:
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crashburner ( Date: 12-Mar-2013 11:31) Posted:
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