THE EDGE SINGAPORE - UOB Kay Hian analysts Lucas Teng and John Cheong are maintaining their “hold” calls on Singapore Press Holdings (SPH) with a lower target price of $1.22 from $1.41 previously.

The rating comes after the media publisher announced that it would be retrenching 140 employees from its media sales and magazine operations.

The incurred retrenchment costs of some $8 million will be recognised in 4Q20.

While advertising revenue for SPH took a severe hit during the economic downturn, digital circulation remained the only bright spot with a 53% growth y-o-y.

On the property front, sales for Woodleigh Residences have been “encouraging” during the circuit breaker, with 43% of the total units sold as at August 16, with an average agreement for sale and purchase (ASP) of $1,892 psf.

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The group’s purpose built student accommodation (PBSA) has also achieved 83% of its target revenue for the coming academic year as of August 14, with local students accounting largely for the remaining bookings.

Potential catalysts include pick-ups in the footfall for SPH’s retail malls, bookings from international students for its PBSA, and a slower-than-expected decline in the media business.

“We input a higher conglomerate discount of 25% (previously 10%), given the severe adverse impact of the pandemic across all business segments for the group,” say Teng and Cheong.

“Current valuation appears undemanding at 0.5x book value although Covid-19 is expected to affect the valuation of SPH’s investment properties. We opine that a better outlook for its property assets could help re-rate the stock. Entry price is $1.00,” they add.

As at 10.11am, shares in SPH are trading flat at $1.08.