Singapore Press Holdings and SPH REIT- Growth Engine in Property Development and Retail Shopping Malls

Singapore Press Holdings ("SPH") has been actively pursuing business development in its property segment as part of its diversification strategy.  Recently,  SPH has again partnered with Japanese developer Kajima to bid for a mixed residential and commercial plot at Seng Kang Central as at 21 June 2018. Just last year, SPH and Kajima had bidded and successfully won the Bidadari mixed residential and commercial plot  just next to Woodleigh MRT Station which will be the heart of the new housing estate. These developments will serve as future catalyst of growth as the revenue of the former Media super star has been declining and in doldrums over the past few years due to market disruption from other online media.

Seven tender submission by major developers for this site. If the SPH-Kajima Consortium wins by beating other major players such as City Development, Far East Organization and Keppel Land, it will be another major win by SPH coming off the recent 2017 newly won Bidadari development project.

From a former giant print media Group, SPH has been slowly transforming itself. As part of SPH's strategic sustainability business plan, it has been building up its property development business and on top of that, it has also been enhancing on recurring income from the commercial shopping mall businesses at Paragon, Clementi Mall, Seletar Mall and the upcoming Woodleigh Mall. Shareholders of SPH will soon have reprieve from the ever falling share prices once the property development projects are executed successfully and the additional recurring income from its latest investment into commercial retail activities starts rolling in. SPH's crown jewel Paragon remains firmly in SPH's possession for future redevelopment as it had crafted out a 99 years leasehold tenure out of its freehold status to SPH REIT.  

Paragon- The jewel of SPH's Property Portfolio

As for SPH REIT, it stands to benefit from the more aggressive venture into the building of shopping malls by its sponsor. Seletar Mall and the upcoming Woodleigh Mall will be the future pipeline for growth as SPH REIT has the right of first refusal over these income producing real estates. SPH REIT had withstood well over the past 2 months of blood letting at the local stock market due to the market interest rates increase and also fear of global trade war. Its debt gearing ratio is one of the lowest among the existing REITS.  

The Clementi Mall serving our local heartland with huge crowds at weekend and weekday

The exciting aspect for SPH REIT in 2018 is the expected completion of the Rail Mall acquisition by end of June 2018 which will begin contributing to its result for 2nd half of the year. I am looking forward to what the management of SPH REIT can do to further improve on the yield of this real estate piece which will be added into the SPH REIT family. By re-positioning via tenant mix as well as other initiatives, there is certainly potential to boost the traffic and enhance the rental for collection. 

As the REIT model is a relatively simpler business with more transparent earnings visibility, I am more confident in terms of its potential for further income growth over the next few years. For SPH, its perceived value depends very much on a wide ranging variables in terms of investor's outlook on the "right" entry price. What is your view of SPH current market valuation? Has the recent market turmoil excessively discount it and thus present the best opportunity to take up a position in SPH now?

(P.S: Please also see my previous post on  "SPH REIT acquiring The Rail Mail at Upper Bukit Timah Road for S$63.24M- First acquisition after IPO for almost 5 years")