SingPost – Lim and Tan

• The stock has reacted positively to recent news of (a) strong demand for new office space coming up in various parts of the country, including Paya Lebar ($1800 psf for Guthrie‘s development), close to its Post Centre.; (b) successful launch of the $350 mln 4.25% senior perpetual cumulative securities.

• In the process, the stock appears to have ended the technical downtrend that began after it topped up at $1.24 in Oct ’10 from a low of 63.5 cents a year before.

• Key point to note is that full potential of Post Centre has not been tapped. And we are not talking of conversion to residential use, which Sing Post cannot do, as the Post Centre is zoned commercial.

• Of the almost 1.5 mln sf space at Post Centre, 300,000 sf represents office, and the balance retail and industrial.

• We believe in the hands of “experts”, there is much that can be done to enhance shareholders value. (car show rooms?)

• At current price, Sing Post’s market cap is “only” $1970 mln, or simplistically $1330 psf.

• Until then, shareholders should be happy with the “sustainable” 6.1% yield, another strong reason to go for the ordinary shares rather than the 4.25% perpetual securities. (6.25 cents a share for the last 5 years.)

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