Singapore Press Holdings Media Segment May Be Reporting Losses

The announcement of further retrenchment of 140 staff by Singapore Press Holdings ("SPH") seems to be pointing to losses in the Media segment. This is really bad news. Hopefully, with the layoff of 140 staff, this will bring back the medium term financial results for Media to at least sustain itself on a break-even point. This is one of my key assumption. Else it means that the property segment will be subsiding a loss-making business which does not make any sense for its long term viability. 

 Key Highlights:

PayScale Industry Singapore Media Benchmark

• One off impairment charges of S$8Mil in Q4 FY2020 for the layoff of 140 staff from Media Solutions Division and SPH Magazines. 
• Strangely, no cost savings numbers were furnished. But let's do a simple mathematical extrapolation ourselves. Using data from PayScale SG, average salary we are looking at is +S$51,842 per annum per headcount. Hence based on 140 staff, we are looking at expected savings of +S$7.3Mil per annum from this restructuring exercise for the next financial year.

Other Highlights:

• Retail results for the year was heavily impacted by COVID-19 and economies lockdown in Singapore and Australia. But next financial year it should do a lot better once vaccine becomes available widely. We need to take a look at the longer term for the retail segment.
• The purpose built accommodation business continued to do well. Booking continued to increase and up to 83% of revenue target for Academic Year 20/21 were filled up. This is up from 75% as at 10 July 2020. 
• I was also surprised by the sales of up to 43% of units in Woodleigh Residences at an average of S$1,892psf. Not too bad for them to be able to move more of the units in this very expensive development.
• I was disappointed that SPH does not seemed to be releasing quarterly financial information anymore especially with regard to the performance of its different segment. Unable to find the Q3 FY2020 results for trending analysis.

Media is already only contributing to very minor profit out of all business segments.

Summary:

Overall, not sure how bad will the Media segment be hit. Will need to wait for the year end results to see whether the 5% reduction in Media staff is sufficient to restore this particular business back to at least break-even point so that it does not become a parasite sucking out the profits from the property segment. The revaluation losses of properties during the recession will also hit SPH badly for the final year results. There maybe more buying opportunities once the full year results is released due to knee jerk reaction from myopic short-term view.