Thursday, October 13, 2011

SPH: To buy or not to buy?

Headline from Channel NewsAsia: SPH sees 22% drop in full-year earnings.

What is the first thing in your mind?
1) Sell SPH shares now.
2) I will wait for next year and see.
3) Buy more SPH shares now.

Let us find out more about SPH before making any decision.

Singapore press holdings announced their results yesterday. For the full year of 2011, they have earned a $0.24 per share. You can get the results in the newspapers today. Using the closing price of $3.78 yesterday, the P/E ratio is at 15.75, still a reasonable ratio, for a public listed company.

The 22% drop is actually due to the fact that FY2010, SPH shareholders enjoy a one time profit from their property development sky@eleven. If you have read into the actual results that include breakdown of the different segments, you will see that there is actually a rise in net profit.

Their total dividend for this year is $0.24 per share. That is, they are giving out about 100% of their earnings this year to the shareholders. That is a dividend yield of 6.35% for the year from 1 September 2010 to 31 August 2011. Not a bad way to grow our savings.

The question now...

When should we buy SPH?

Jac's answer: When the price has hit below your personal valuation of the company.

We can actually set our own target buy price. For example, if you think that you want to get at least a 7% dividend, then buy at $3.43. If you do not mind the 6.35%, you can buy now. It all depends on your own preference.

Other than the print business, news business, SPH also owns Paragon and the just completed Clementi Mall. These two malls will enjoy close to 100% lease out each year. I am very confident of that. If there is time, no harm reading their results by clicking the link below.

Understand SPH's businesses better and you will know how to give your personal value of the company.

Happy investing and cheers!

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