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SPH reported a 35% drop in 1Q net profits this week. Its share price started to price in the news 1 week prior to its results release and have been a downward trend ever since.
Is there any cause for concern for investors to cut loss? Will there be a dividend cut? I would like to share my take on SPH’s fundamentals and outlook.
Basically, SPH unexpected loss came from its investment portfolio. It has a marked to market (MTM) loss of $34M. Though I might be wrong, I do not believe the paper loss on its funds will directly result in a reduced dividend payout. For instance, my cash flow (salary) per month is $4000. After accounting for MTM losses in my investment portfolio, I am losing $8000 per month.However, I still have $4000 to pay myself, parents, bills and other expenses. I do not need to fork out $4000 to pay my investment loss.
Similarly, SPH do not have to realise its investment loss, unless they are borrowed funds. Records show that it has a $1B investment portfolio.
Paper loss (MTM) and free cash flow are not to be read under the same light. This explains the increased of cash at bank from $30M to $43M and fixed deposits from $180M to $397M, QoQ. There is an increase of $60M in cash and cash equivalents, YOY. (Part of it should come from the $150M loan capital.) Read more...[caption id="attachment_1559" align="alignright" width="190" caption="SPH AR 2008 Cover Page"][/caption]
SPH reported a 35% drop in 1Q net profits this week. Its share price started to price in the news 1 week prior to its results release and have been a downward trend ever since.
Is there any cause for concern for investors to cut loss? Will there be a dividend cut? I would like to share my take on SPH’s fundamentals and outlook.
Basically, SPH unexpected loss came from its investment portfolio. It has a marked to market (MTM) loss of $34M. Though I might be wrong, I do not believe the paper loss on its funds will directly result in a reduced dividend payout. For instance, my cash flow (salary) per month is $4000. After accounting for MTM losses in my investment portfolio, I am losing $8000 per month.However, I still have $4000 to pay myself, parents, bills and other expenses. I do not need to fork out $4000 to pay my investment loss.
Similarly, SPH do not have to realise its investment loss, unless they are borrowed funds. Records show that it has a $1B investment portfolio.
Paper loss (MTM) and free cash flow are not to be read under the same light. This explains the increased of cash at bank from $30M to $43M and fixed deposits from $180M to $397M, QoQ. There is an increase of $60M in cash and cash equivalents, YOY. (Part of it should come from the $150M loan capital.) Read more...
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SPH reported a 35% drop in 1Q net profits this week. Its share price started to price in the news 1 week prior to its results release and have been a downward trend ever since.
Is there any cause for concern for investors to cut loss? Will there be a dividend cut? I would like to share my take on SPH’s fundamentals and outlook.
Basically, SPH unexpected loss came from its investment portfolio. It has a marked to market (MTM) loss of $34M. Though I might be wrong, I do not believe the paper loss on its funds will directly result in a reduced dividend payout. For instance, my cash flow (salary) per month is $4000. After accounting for MTM losses in my investment portfolio, I am losing $8000 per month.However, I still have $4000 to pay myself, parents, bills and other expenses. I do not need to fork out $4000 to pay my investment loss.
Similarly, SPH do not have to realise its investment loss, unless they are borrowed funds. Records show that it has a $1B investment portfolio.
Paper loss (MTM) and free cash flow are not to be read under the same light. This explains the increased of cash at bank from $30M to $43M and fixed deposits from $180M to $397M, QoQ. There is an increase of $60M in cash and cash equivalents, YOY. (Part of it should come from the $150M loan capital.) Read more...
