Total Singapore advertising expenditure ("adex") in December declined at its fastest YoY rate in 5yrs (-13.1% YoY to S$167.8m), according to Nielsen Media Research ("Nielsen"). Correspondingly, Nielsen's estimated December print adex (newspapers and magazines) also fell at its fastest yearly ratein five years: -11.8% YoY to S$79.4m. However, given print adex only deteriorated significantly in November and December, total estimated print adex for the first four months of SPH's FY09e (Sep-Dec 08) is down just -3.9% YoY. But we expect the advertising market to continue to deteriorate given ongoing evidence of Singapore's rapidly slowing economy (see our recent SPH note "Slowing advertising will hurt", 12 Jan 09), and as such, we continue to assume that SPH's FY09e advertising revenues will shrink -11.7% YoY to S$689m and -6.2% YoY in FY10e. As Nielsen tends to over- estimate actual advertising revenues, we believe SPH booked approx S $58m of advertising revenues in Dec 08 versus an estimated S$68m in Dec 07 (an approx -15% YoY). And for reference, we estimate SPH has booked approx S$246m in advertising revenues in the first four months of FY09e (36% of DB09e).

Adex data not pretty but in-line with DBe & yield should support We believe our advertising revenue forecasts for SPH remain reasonable given the recent Nielsen data but we have previously highlighted the sensitivity of advertising to economic trends and it is possible the downturn in SPH's advertising revenues could exceed our conservative forecasts. But even on our estimates, our dividend expectations appear sustainable and as such, the relatively attractive yield should provide support at current level. As such, we maintain Hold but will be watching advertising trends closely.