SPH- The New Transformer And Interesting Points To Note

SPH recently announced its 3rd quarter ending 30 June 2018 financial results and more insights into Management strategy in its Property Business. While investors must be happy to know that SPH is embarking on a transformation journey by riding on its new growth engine, the traditional Media business is still in doldrums. 

Key Highlights:

1. New strategy by SPH is to focus on the acquisition of cash yielding, real estate assets overseas. 

2. SPH is particularly interested in Aged Care business which it believes to be a recession proof business. There are also opportunities for investments into overseas student care accommodation. Recently, Temasek via Mapletree had invested over 1 billion into UK student Housing.

3. The Property segment of SPH currently contributes approximately 60% of its profit. The diversification strategy into Property business has been very successful and it has continued to provide a steady income stream and stability to SPH Group.

4. The Woodleigh Residences, Woodleigh Mall and the bid for Seng Kang Central will be additional local future catalyst of growth for the Property Business in Singapore. Please refer to my previous blog (Singapore Press Holdings and SPH REIT- Growth Engine in Property Development and Retail Shopping Malls).

5. While there is a lot of focus on the new Property Business as its future growth engine, the key point to note is that the decline in its traditional media business is still ongoing albeit the good sign that the rate of degeneration has slowed down.

6. The presence of the impairment charge means that the Media business is definitely not out of the woods yet. It remains to be seen how Management contains the damage from the persistent decline. SPH may have to look for more cost cutting measures in its Media segment even though it just completed a staff restructuring exercise.  

While I am glad that SPH management is now playing Transformer, I am sadden in a way that the Media business is gradually slipping away just like the Transformer 2014 movie: "The Age of Extinction". The strangest thing out of all these latest development is that the SPH acronym actually stands for "Singapore PRESS Holdings" but it is now becoming more of a Property Group. 

But guess it does not really matter right? “不管黑猫白猫，能捉老鼠的就是好猫！”