SINGAPORE (April 17): OCBC is maintaining its “sell” on Singapore Press Holdings with unchanged fair value estimate of $3.41 given the uncertain economic outlook and the continuing disruption of the media industry.

“We expect conditions to remain challenging for the group’s media business ahead,” says lead analyst Carmen Lee in a Monday report.

SPH announced that 2Q17 PATMI dipped by 1.2% y-o-y to $53.5 million but group recurring earnings on an operating level declined 22.2% y-o-y to $53.0 million.

In terms of the topline, group operating revenue fell 8.2% y-o-y to $238.0 million mostly due to weaker contributions from the media business which fell 11.9% y-o-y.

1H17 ad revenues declined 16.8% y-o-y on continued headwinds in its operating environments due to the slowing economy and the unabated disruption of the media industry.

Revenues from display and classified ads similarly fell 17.5% and 14.4% y-o-y, respectively.

The management team has focused on cost management and total costs for the quarter fell 3.8% y-o-y to $188.7 million despite inflationary pressures.

1H17 staff costs dipped 0.9% y-o-y to $182.4 million as headcount as at end Feb 2017 stood at 4,041 which was 5% lower than the 4,255 last year.

The group’s property segment pulled in stable numbers with revenues inching up 1.3% y-o-y as rental income rose and net property income grew 5.9% to $93.9 million.

All three retail assets held by SPH, namely, The Paragon, The Clementi Mall and The Seletar Mall, enjoyed 100% occupancy and positive rental reversions over the quarter.

“We deem this set of results to be marginally below our expectations and we tweak our FY17 net income forecast down by 6% to $216.0 million to reflect the difficult business conditions the group is facing currently,” says Lee.

An interim dividend of 6 cents per share was declared.

Shares of SPH are down 4 cents at $3.42.