SPH share price at mercy of OCBC Bank?


It is that “uh-oh” feeling for SPH share price again. As an OCBC shareholder, I have a special interest in SPH share price. Why is this so? After all, this article is about SPH share price and not OCBC bank. Read on to find out why.

Troubles certainly come in troops for SPH share price. In the 3rd quarter business update, SPH management revealed that COVID-19 pandemic had resulted in revenue from print advertisement plummeting 51% year-on-year while rental income from its Singapore retail assets also got hit due to the circuit breaker from April to June. To rub salt into the wound, one of its aged care assets (Orange Valley) was a COVID-19 cluster (thankfully all affected patients had been discharged).

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Given the gloomy backdrop, SPH share price continued its downward journey to the bottom of the cliff. Should shareholders hang on for their lives or throw in the towel? In my opinion, current SPH share price is so bad its good.  At 0.5 to its book value, SPH share price is indeed trading at very attractive level.

Question now is: will the major shareholders make a move to privatize the media conglomerate on the cheap? Given the current SPH share price, is this counter a value trap or value buy?

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in SPH before. Whether SPH share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

SPH share price in destructive mood

The decline of SPH share price in recent years makes it one of the biggest falling stars in SGX. The massive slide in SPH share price could prompt the major shareholders to take action. According to the FY2019 annual report, there are two main groups of shareholders – OCBC Bank and Temasek Holdings.

For sure, SPH share price is well supported by a number of institutional players. There is currently a total of 16.3 million management shares. OCBC bank holds 16.8% stake while Great Eastern holds 22.6%. Most investors would know that OCBC Bank holds 88% stake in Great Eastern, so the bank actually has an effective stake of 39.4% stake in SPH management shares. On the other hand, Temasek Holdings holds an indirect stake of 26.8% of management shares through DBS Bank, Singtel and Fullerton Pte Ltd. Thus, the largest shareholder should be OCBC Bank. Other major investors included NTUC Income (16.35%) and UOB Bank (8.05%).

With almost 40% stake in SPH management shares, OCBC Bank [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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