SINGAPORE (Apr 12): OCBC Investment Research is maintaining its “hold” with a slightly higher fair value of $2.52 from $2.51 previously, after adjusting its assumptions upwards for bottom-line growth contributions from the property segment.

This comes after SPH’s 2Q18 results came in largely in-line with expectations, with 2Q PATMI down 24.9% on-year to $40.2 million and an interim dividend of 6 cents declared, unchanged from a year ago.

See: SPH 2Q earnings fall by a quarter to $40.2 mil even as losses for media business narrow

Based its Wednesday closing price of $2.49, the counter trades at a FY18F dividend yield of 6%.

In a Thursday report, lead analyst Joseph Ng highlights the success of ramping up digital circulation count as key to underpinning and sustaining the appeal and viability of SPH’s integrated marketing offering in the medium-term.

“We note that the daily average digital circulation has seen an increase of 112,000 copies from 2QFY17 – 2QFY18. However, with the 7.5% drop in circulation revenue in 2Q18, we believe that more time is needed for the ramp up in digital circulation to arrest the decline in print subscriptions,” he comments.   

SPH last month introduced a Straits Times Basic Digital package last month to target the price-sensitive customer segment, which, together with similar offerings for other digital publications moving forward, Ng believes should help to increase digital penetration in a meaningful way.

In the nearer term, the analyst sees SPH’s property segment continuing to bolster its earnings as it accounts for 60% of the group’s 1H18 profit.

“Development of The Woodleigh Residences and recurring income from the group’s fourth retail mall should also aid in bottom-line growth, albeit in the medium term,” adds Ng.

As at 11.34am, shares in SPH are trading flat at $2.49 or 18.4 times FY18 earnings.