SingPost – CIMB
• In line. 4Q09 earnings of S$35.3m (+2.5% yoy) are in line with consensus and our estimates, accounting for 24% of our full-year estimate. Revenue fell 2.9% yoy to S$115.6m. 4Q09 dividend of 2.5cts/share beat our forecast of 1.8cts/share. FY09 earnings dipped 0.3% yoy to S$148.8m on the back of revenue growth of 1.8% yoy to S$481.1m. Full-year dividend was 6.25cts/share.
• Weaker revenue because of business mail. As expected, revenue growth in 4Q was weak due to the poor economic environment. Mail revenue declined 2.1% yoy on lower international mail contributions while logistics revenue was flat. Retail revenue slipped 7.7% on lower product sales. Operating expenses fell, thanks to lower labour-related expenses as there were benefits from the Jobs Credit Scheme, and lower volume-related expenses, in line with the decline in business.
• Outlook. Management continues to guide for a challenging environment and will continue to give priority to cost management. In view of the downturn, the group is unlikely to sell Singapore Post Centre in the near future.
• Maintain Neutral; unchanged DDM-derived target price (discount rate: 8.5%) of S$0.80. Our earnings estimates are intact. Although dividend yields are attractive at 7%, we remain Neutral on the stock given limited share-price upside. We also introduce FY12 forecasts. Key risks to our rating include a change in its dividend policy and higher-than expected costs.