Tuesday, November 15, 2016

Singapore Press Holdings Ltd (SPH) is getting attractive

The share price of Singapore Press Holdings Ltd is getting very attractive.

It has been on a downhill trend, especially since the announcement of the retrenchment started.

In fact, the rumor started it.

Everyone in Singapore knows that the core business of Singapore Press Holdings Ltd is not doing well.

Many people are not buying newspapers.

They do read news, but they read freely online or they collect free newspapers from the MRT stations.  Those who have time on hand will go to the library to read.

They just are not interested in paying for newspapers.

However, SPH is a diversified company with three segments: Newspaper and Magazine, Property, and Treasury and Investment.

The property segment appears to do rather well.

As I am an dividend, I am more interested in the dividend history.

SPH pays dividends twice a year.

The payment in May is consistently at 7 cents.

The payment in December includes a dividend of 8 cents and whatever special dividend declared.

The special dividend is the one that is not fixed. The current year special dividend is 3 cents, down from 5 cents in the previous year.

For conservative purpose, I assume that there will not be any special dividend in the future.

That means I can only rely on 15 cents of dividend every year.

Given the fact that SPH has a solid business and has not made a loss, it is all right to expect that the core dividend of 15 cents to be sustainable.

My expected yield is 5%.  At this rate, I am willing to pay just $3 for the share.

If I lower my expectation to 4.5%, I will buy when SPH reaches $3.33.

It will be long wait for SPH share price to drop till $3.


It is not impossible, though not likely to take place within the next two months.

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