SPH badly hurt by recent onslaught of cooling measures

Profit plummeted 14.7% to $72m.

According to Maybank Kim Eng, SPH’s 2QFY8/13 results were weaker than expected. 2QFY13 Revenue came in at SGD282m (-5.5% yoy) and net profit also dropped to SGD72m (-14.7% yoy).

Government regulations on property and automotive sector (increase in second-home buyer’s stamp duty and the restriction on car loans) badly hurt the ad revenue in those two sectors and were the main driver for the 10% decline in display ad revenue. The exhibition revenue was also affected by Suntec renovation.

Here's more from Maybank Kim Eng:

However, the earnings dip will not last long in our view, and the dividends track record is sustainable at least until the REIT spinoff takes place. Maintain BUY with target price unchanged at SGD4.95 based on SOTP methodology.

We expect a recovery in next quarter, especially in property advertising revenue. SPH’s property ad revenue experienced a sudden drop in January after the government announced the latest round of property cooling measures.

However management indicated that the property ad revenue started to recover since late March. We expect this momentum to continue into next quarter backed by the abundant new homes supply in the coming months.

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