I am going to do a concise and straight-forward review about SPH's strengths and prospects in Part 1 because I have decided to increase my holdings of the stock after its Ex-date.
Strengths of SPH:
1. Monopolistic Nature of Core Business:
SPH is the main publisher of newspaper and magazines in Singapore. Its core print business is generating stable cash flow. Being an Asian country, the newspaper readership figure in Singapore is high. This is also especially true in Hong Kong and India too. I guess Asians just have to get their daily newspaper "fix" :) I am pleasantly surprised by this because the newspaper companies in the West are declining.
Primary school pupils discussing current affairs after reading the newspaper
Another positive is that schools in Singapore actually mass order newspaper for their pupils. Most schools order once per week for their English and Mother Tongue lessons. Therefore, this can be considered a long-term business. The pupils are required to complete at least one newspaper article review per week. I have a friend who is teaching at primary level, so that is how I get to know this info.
Read more about the Newspaper Boom in Asia here. < Click Click :P
2. Property Investment:
Paragon shopping mall is conveniently located in the heart of Orchard Road. Paragon's renovation works had been completed. The luxury shopping mall has achieved almost 100% occupancy rate.
Clementi Mall, which is a co-venture with NTUC Income, will be opening in two phases starting in Jan 2011. This means that the shopping mall will start contributing rentals from the 2nd Quarter onwards and stabilises in the 3rd Quarter. Clementi Mall is located in an estate with heavy human traffic due to its proximity to the Clementi MRT station, bus interchange, HDB residential homes, Singapore Polytechnic, Ngee Ann Polytechnic, SimUni and NUS.
Read more about Paragon and Clementi Mall here. < Click Click :P
3. High Adaptability:
Even though its core print business is doing fine at the moment, SPH is not sitting on its laurels. The company is slowly but surely moving towards new media. SPH's newspaper websites, STOMP. Razor TV and Hardwarezone.com are doing great too.
You can visit STOMP, Razor TV and Hardwarezone.com here. < Click Click :P
SPH also created Apps for the iPhone and iPad. The latest tablet PC craze will make newspaper appeal to the tech-savy generation.
Besides new media, SPH has also divest into managing events such as COMEX, PC Show and Food Festival.
4. Consistent Dividends with Reasonable Yield:
Yield of about 6% to 7%. Not only give, but maintain the amount of dividends even in the worst global financial crisis in history. SPH gave $270 in cash dividends in 2008 before the sub-prime crisis exploded in the US. In 2009, when the global recession was in full swing, SPH still gave $250 in cash dividends. Many companies cut their dividends or even stop giving dividends totally. It is really reassuring and heartening to know that SPH will still think of the shareholders' welfare in difficult economic times.
5. Capable Management and Leadership:
Dr. Tony Tan. Enough said.
Please let me know your thoughts by commenting below :)
Part 2 will be out soonish, after my buffet dinner at Sakae Sushi, Suntec City. Using my bonus to treat my family to a good meal :)