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7 Quick Things I Learned From Singapore Press Holdings’ AGM 2014

In recent years, digital media has disrupted the business model of traditional print mediacausing a huge structural change in the industry.

The current generation of readers consume their news less and less from newspapers (myself included) and now get information instantaneously from the Internet and social media at a touch of a smartphone screen.

Newspaper companies around the world are facing this same issue and are doing their frantic best to adapt to the changing environment. Singapore Press Holdings (SPH), the country's venerable newspaper publisher, is also not spared from this upheaval.

I attended SPH's AGM this year with an objective to find out how the company plans to deal with this digital revolution. So here are….

7 Quick Things I Learned From Singapore Press Holdings' AGM 2014

  1. SPH chairman Lee Boon Yang mentioned that media companies throughout the world are experiencing a transition; traditional print media is being attacked by digital technology.



    Looking at the graph above, SPH's newspaper & magazine operating revenue has been decreasing year on year. This year, SPH's newspaper circulation for print and digital editions grew by 1.7%. But the growth is not due to the print editions but rather the digital editions. SPH is now, in many ways, a digital media company and we will continue to see them grow their digital arm in years to come.
  2. SPH pay their dividends through their recurring earnings which are mainly derived from their media, property, and other businesses. Their dividend payout ratio has consistently been above 80% of their recurring earnings and this year their payout ratio was more than 100% of their recurring earnings. The things is, even though SPH's dividend payout ratio was more than 100% this year, their dividend per share has decreased from 27 cents (2010) to 21 cents (2014).



    This is because the performance of their newspaper and magazine segment, which contributes 76.7% of their total operating revenue, has been suffering which in turn affects the company's dividends. As SPH continues their transition in this digital era, we may see their dividend being affected in the near future.
  3. SPH is diversifying their business model by acquiring digital media and education companies. In recent years, SPH has acquired SGCarMart, CoSine Holdings, Mudah.my and MindChamps. These businesses are profitable and directly contribute to SPH's revenue and profit. Knowing this, a large part of SPH's focus now is on acquisitions to continue to grow their bottom-line.
  4. SPH’s interest in acquiring digital media companies has led them to set up a $100 million SPH media fund. This fund’s mandate is to invest in digital media startups. Because these companies are startups, higher risk is involved but the long-term payoff is potentially huge. The chairman has stated: ‘Some of these investments would not succeed because of the nature of the investment. Some startups will make it big and pay off very well, and there will always be some that will not turn out well and we have to accept it. SPH will continue to invest prudently and selectively with an eye towards maximizing our investment.’ SPH has a team managing this fund who sources for and studies potential acquisitions. They also have a list of potential startups they are examining at the moment.
  5. In 2013, Telnor, Schibsted Media Group, and SPH teamed up to create two joint ventures to develop high-quality online classifieds in Asia and South America. Schibsted has been one of the more successful companies at handling the transition from print to digital media, while Telnor's expertise is in the area of mobile communications. In 2014, Naspers Limited partnered the joint ventures for the further development of online classifieds in four key markets – Brazil, Indonesia, Thailand and Bangladesh.
  6. SPH Reits has first right of refusal if SPH decides to divest Seletar Mall. The chairman mentioned that the new mall needs to be nurtured and rental reversion has to go through a certain cycle before they can inject the asset into SPH Reits. Seletar Mall must be able to produce good performance data before SPH will initiate the process.
  7. SPH will continue to look for opportunities in the property sector and evolve new models for managing their malls in order to produce a higher rental yield.

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Robin Han
Victor Chng

Victor Chng is an equity investor and the co-founder of the online investment magazine The Fifth Person. He is also the co-creator of The Investment Quadrant, an online multimedia stock investment course where students can learn how to invest profitably in the stock market. Victor has been featured multiple times on 938LIVE as a guest expert on MoneyWise and is also the co-author of Value Investing in Growth Companies which is internationally published by Wiley, Inc. The book can be found in all major book stores worldwide and on Amazon.com, Amazon.co.uk, Barnes & Noble and Apple's iBooks. If you're interested to learn more about stock investing, you can join The Fifth Person Newsletter and receive free weekly insights on how you can generate higher returns and dividend income from the stock market.