SPH downgraded to "neutral" by Merrill Lynch!

Merrill Lynch has downgraded its rating on Singapore Press Holdings (SPH) to "neutral" from "buy" after the media company reported weaker-than-expected earnings for its third quarter to May. Yesterday, SPH said its net profit in the three months to May rose 80.7 pct year-on-year to 174.6 mln sgd due to an exceptional gain from the writeback of impairment losses for its Paragon shopping mall. But Merrill Lynch said "excluding the 69 mln sgd exceptional gain, SPH's third quarter net profit came in 10 pct behind our estimate." "While we have anticipated weak display ad growth due to the absence of several ad campaigns this year, the 7.5 pct year-on-year decline was worse than expected," it said. Apart from the disappointing results, Merrill Lynch said investors who buy SPH shares for special cash returns may be frustrated by the management's statement that it will hold on to Paragon in the foreseeable future. At 9.12 am, SPH was flat at 4.08 sgd with 363,000 shares traded.