SingPost – Lim and Tan

Doing Things

Sing Post is raising $200 mln via a 10-year fixed rate note issue, to finance "new investments, anticipated capital expenditure and working capital requirements".

Sing Post's existing 3.13% bonds ($302.91 mln outstanding at end Dec '09) are not due to mature till April 2013.

The new note issue will raise total borrowings to $502.9 mln, against current Shareholders Funds of $275.52 mln. Cash at end '09 was $148.56 mln.

Sing Post is expected to release results for ye Mar '10 in late April (on the 30th last year).

COMMENTS

1. We expect the latest development to revive speculation of Sing Post selling the Post Centre at Eunos, and making a special payout.

2. Local press had in July '08 reported that Post Centre was put up for sale at asking price of $850 mln, which would have worked out to 44 cents per Sing Post share. The company announced the termination of the sale negotiations in Apr '09.

3. Fact of the matter is, there is no urgency to sell Post Centre, given Sing Post has done much with it, as seen in the 27% increase in rental and property related income to $30.21 mln in the first nine months of FY 09/10. Revenue from the core business was $391.67 mln.

4. In any case, taking on more debt will not pose a problem, given the strong operating cash flow of in excess of $200 mln a year.

5. We have been recommending BUY, largely because of the attractive utility-type 5.8% yield. (Sing Post has been paying 6.25 cents a share for at least the last 3 fiscal years, comprising quarterly rate of 1.25 cents, and final f 2.5 cents.)

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