SPH @ $4.48

SINGAPORE (XFN-ASIA) - Singapore Press Holdings Ltd (SPH) was lower on profit-taking, following three consecutive sessions of gains triggered by hopes it will soon divest the Paragon shopping mall, dealers said. In early trading, SPH was down 0.04 sgd or 0.89 pct at 4.48 on volume of 1.02 mln shares.

Yesterday, SPH downplayed expectations of the sale of Paragon, saying it is not in discussions with any party about the sale of the shopping mall. "The recent desktop valuation of Paragon was carried out as part of a loan facility requirement," SPH said in a statement. The Paragon shopping mall was revalued at 1.38 bln sgd late last month, higher than last year's valuation of 1.2 bln sgd. However, earlier this week, SPH said in an e-mailed statement in response to a query from XFN-Asia: "We have received many enquiries on Paragon from interested parties and are keeping our options open."

SPH will report its third quarter to May results next Tuesday. Analysts polled by XFN-Asia said they expect SPH to post a net profit of 98-105 mln sgd, compared to 97.60 mln sgd in the previous quarter. However, SPH's third quarter net profit will be significantly lower than in the corresponding period in 2004, when SPH posted net earnings of 369.5 mln sgd, boosted by exceptional gains, they said.

Report fm Lehman Brothers dated 6-Jul here
SPH @ $4.42 looks fully valued given decelerating earnings growth momentum and lacklustre growth prospects over the medium term.

Report fm CitiGroup dated 6-Jul here
Our 12-month target price of S$5.26 is based on our estimate of SPH sum-of-the-parts valuation. There could also be a S$0.30 increase in our sum of parts valuation to S$5.56 as we have valued Paragon at a lower price in our valuation

Report fm Kim Eng dated 6-Jul here
SPH trades at FY05/06 PE of 14x and 17x, with dividend yields forecast at 8.8% this year, and 7% next year. BUY maintained for attractive yield.

Report fm CSFB dated 1-Jul here
Although it has underperformed 14% in the past six months, SPH continues to trade at an above-average P/E premium to the Singapore market – the stock trades at a 32% P/E premium to the market versus a five-year average premium of 27%. In view of the weak growth prospects, we believe that the huge premium is unjustified. Our target price of S$4.00 represents potential downside of 7% from current levels. We maintain our UNDERPERFORM rating.

Report fm UBS dated 29-Jun here
Having retreated some 15% from S$5.00, we think SPH’s valuation is beginning to look attractive on most valuation parameters, such as sum of parts, ROCE/WACC spread and global peer comparison. Our valuation is based on sum of parts with S$1 for its non-core business and DCF of core business. Price target $4.90

Comments - The recent optimism on SPH was triggered by the sale of several properties by CDL and Wing Tai to Suntec REIT plus the very optimistic report by CitiGroup. As it ran up fm $4.30 to a high of $4.56 over 3 days ($0.26 or ~6%), I decided to do some profit-taking and sold at $4.52 and $4.54, esp. since SPH also released a statement yesterday to deny that they are selling Paragon any time soon. Further, the 3 reports above also do not expect the coming Q3 results announcement on 12-Jul to be 'exciting'.

I have recalculated my remaining SPH average prcice to be $4.41 (finally take into acct the capital reduction exercise last yr) and now forms aro' 15% of my portfolio of local shares. I plan to buy on any price weakness, first tgt aro' $4.38.

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