What a wonderful development! Singapore Press Holdings ("SPH") finally got the green light from the government to get rid of its loss making media segment. In my last post on the potential restructuring scenarios, I have been hoping for the disposal of its loss making media segment for the longest of time and it finally materialised. But still, I was quite disappointed that SPH need to waste money to appoint Credit Suisse as their "financial advisor" for the restructuring exercise. Is it not obvious that in a commercial business, loss making segment needs to be closed down or sold off instead of allowing it to fester for so many years? The essence of such a corporate restructuring actually lies in going after the various government agency/Ministry to lobby for such a move. The green light for such a daring manoeuvre can only come from the blessing of the Singapore government- you do not need an external financial advisor for this.
The free S$80Mil cash injection and donation of SPH and SPH REIT units worth S$30Mil to the new entity as SPH's divorce settlement deal with the loss making media segment is actually a very small price to pay. SPH profitability of 1 year from its pre-COVID property business should be more than adequate to cover this hence inflicting only a tiny dent in its overall long term financials.
The only key question now is the branding of SPH going forward. With no media segment at all, does it still make sense for it to call itself "Singapore Press Holdings" when it is in fact a real-estate Group? Also, I am extremely disappointed that with the appointment of a financial advisor looking at this for 1 month on available options, they could have also added in the deal to divest Seletar Mall to SPH REIT to unlock further value.
The market seems to disagree convincingly with this 'wonderful development' looking at the nosedive the next trading day.
ReplyDeletePity those taken for a ride buying on the their "strategic review" hype. What a disastrous strategic review.
Hi Moderator,
DeleteThe CEO of SPH might take "umbrage" at your comments on the outcome of their strategic review...haha.
Jokes aside, those who have entered at S$1.00 or S$1.20 5mths-6mths ago would still be sitting on profits of 27% to 52%.
For those who have bought recently at S$1.70 per share to S$2.00 per share, they would indeed be staring at losses in the short term. But if looking at the long term view, chopping off a loss making business unit would give a fresh unburden start finally to its property business. It also remove shareholding restriction and open up SPH for more corporate actions including selling off itself to external well-heeled buyers.
The other scenario would have been that SPH is left with loss making media segment and continue bleeding. I can't see any other way out of this unless the government used the other way via legislation adopted by Australia to force Google and Facebook to pay SPH.
Hi there,
ReplyDeleteFirst time sighted your Blog, impressed on your assessments & forecasts on SPH. It is one of counters in the FSSTI following closely, since last year when the counter rock-bottomed at $0.99 (Nov2).
Also concluded that the most efficient method to unlock Shareholders' values is eventual selling off the remaining businesses / or merge with one of the highly captalised SG Reits/Property Co. in SG, after the CLG separation.
On last Friday, we have had truly witnessed "Blood in the Streets" with SPH. Huge quantity shares exchanged over 4X, the 10 days-Avg and worse one day decline of -15% in SPH listing history over 30years in SGX Mainboard since 1984.
Actually, on that day, I bought a bunch of SPH shares with Expectation potential of +$0.50 per share gains.
Thanks for your thoughts and comments. SPH remaining business more of property management with only occasional property development. Unless the CEO decides to focus on property development full time as a primary business, I think the property management should go up to its NAV of S$2 plus eventually in the longer term. Good buy at S$1.52 range if don't mind waiting for a longer term.
ReplyDeleteHi there,
ReplyDeletejust for update: 26-May 2021.
After tanking from trading halt price of $1.79 down to $1.52-$1.60 range on Friday, 7-May, SPH counter has since recovered strongly back to $1.74-$1.77 range bound, in about 10 trading sessions.
This week, decided & liquated total SPH Portfolio positions with ca. +10 % profits, bought on 7-May.
On basis new assessment conclusion, SPH valuation and uptrend momentum may have peaked at current price status & situation :
i.e. $2.08 x 15% Discounted on Remaining Assets (after CLG)= $1.77 /share.
Until, a substantive real offer to acquire all remaining Assets, lock-stock-barrel, sighted on the table, opine the full value of SPH assets at Price/Book = 1.0, ie. $2.08 / share (after the CLG) would not be unlocked, anytime soon.
Hence, take profits at price range $.74 - $1.77. Otherwise, like you say,
correctly, "If don't mind waiting for a long term".
Shall repurchase & add-back, at ca. $1.64 ie. 10% retracement from recent high $1.82.