SingPost – OCBC
Steady yield play
- 3QFY14 results in line
- 1.25 S-cents interim dividend
- Unchanged FV estimate
3QFY14 results in line
Singapore Post (SingPost) reported 3QFY14 PATMI of S$39.4m which was flat YoY (-0.2%). 9MFY14 PATMI now cumulates to S$112.3m, constituting 76.0% of our full year forecast and we judge this to be mostly in line with expectations. In terms of the topline, 3QFY14 revenue grew 30.2% YoY to S$222.6m, up from S$171.0m in 3QFY13, mainly due to contributions from acquisitions and an increase in e-Commerce activities. Net flow generated by operating activities remained healthy at S$40.2m in 3QFY14 versus S$39.8m generated in 3QFY13. We note that total expense growth in 3QFY14 rose at a rate (up 34.4%) marginally above that of revenue (30.2%) due to increased exposure to lower net margins businesses.
Domestic mail volume decline for the 8th consecutive quarter
Domestic mail volume declined for the eighth consecutive quarter but including e-commerce packages overall mail revenue for 3QFY14 grew 12.8% YoY to S$133.2m. Revenue from the logistics business was boosted by contributions from two acquisitions, General Storage Company and Famous Holdings (acquired Jan-13 and Feb-13, respectively), and grew 64.5% YoY to S$101.2m. Excluding contributions from these two acquisitions, however, logistics revenues grew 4.3% YoY. For the Retail and e-commerce segment, 3QFY14 revenue dipped 6.1% YoY to S$22.6m as contributions from agency services declined. Rental and property-related income for the quarter held steady and increased 1.9% YoY to S$11.4m.
Steady yield play
In line with its usual practice, the group has proposed an interim quarterly dividend of 1.25 S-cents/share. We continue to like SingPost’s consistent dividend policy which is backed by stable operating cash flows, but see few re-rating catalysts for now. Maintain HOLD with an unchanged S$1.32 fair value estimate.