SINGAPORE (July 26): Singapore Press Holdings is now the worst performer on the MSCI Singapore Index, as shares hover at a 25-year low, after a strategy to diversify into real estate has so far failed to offset sagging earnings from its media business.

The company, the city-state’s largest media group, is down 4.3% this year, compared with a 12% gain in the 25-member MSCI Singapore Index. The other worst performers on the gauge include Genting Singapore Ltd. and Sembcorp Industries Ltd. In the benchmark Straits Times Index, which is jointly compiled by the company, Singapore Exchange Ltd. and the FTSE group, SPH is only faring better than three Jardine Matheson firms.

More than half of Singapore Press’s sales comes from its media business, which has been suffering from digital disruption amid the rising use of the internet and smartphones. To offset those declines, Chief Executive Officer Yat Chung Ng has embarked on expanding the firm’s real estate and digital businesses. SPH didn’t reply to an email seeking comment on its performance on the gauge.

The diversification into real estate is helping, but "the core business is deteriorating at a much faster pace,” said Jarick Seet, head of small and mid-cap research at RHB Securities. “Other segments are not able to replace the drop in earnings” in the media business.

Net income at Singapore Press is set for a seventh annual decline in eight, according to data compiled by Bloomberg. Sales from media, which includes The Straits Times and The Business Times, for the nine-month period ended May 31 fell 12% to $439.7 million from a year ago, while the division’s profit before tax declined 32% to $52.1 million, according to a company statement on July 12. Revenue from property rose 21% to $220.7 million.

See: SPH posts 44.1% drop in 3Q earnings to $26.2 mil as media business continues to face challenges

Once bigger than the New York Times Co. in terms of market capitalization, Singapore Press has shrunk in value in the past two years. Shares are set for a fifth yearly decline and the firm has lost almost half, or $3.2 billion, of its market value since the end of 2014.

Analysts so far haven’t been impressed with the company’s attempts to increase digital revenues and acquisitions of potentially income-yielding real estate assets.

The company bought Orange Valley Healthcare, a nursing home provider, for $164 million in April 2017 and took a goodwill impairment of $21.5 million in the third quarter of this year.

“Dispersed portfolio (asset types/geographies) makes it difficult for SPH to be seen as a ’key’ property firm,” Citigroup Inc. analyst Patrick Yau wrote in a note on July 15. He kept his sell recommendation on the stock, saying catalysts for a rating change would include a recovery in its media business, greater operational focus on its varied interests and lower non-core investments.

“The media business continues to be challenged on various fronts including the ongoing trade tensions and the slowing of the Singapore economy, but we remain focused on our digital transformation strategy,” Ng said in a statement after the company’s third-quarter results on July 12.

Shares in SPH closed flat at $2.25 on Thursday,