Category: SingPost
SingPost – DBSV
Slow and steady
At a Glance
• FY11 underlying profit of S$149.6m and final DPS 2.5 Scts were in line
• Regional M&A and share buybacks cannot be ruled out
• Maintain HOLD with TP of S$1.17
Comment on Results
FY11 net underlying profit of S$149.6m (+1% YoY) was in line with our expectations. Proposed final DPS of 2.5 Scts brings FY11 DPS to 6.25 Scts, same as last year. Group revenue was up 7.7% with logistics segment growing 14%, followed by 7.1% growth for mail and a stable retail segment. Expenses, however, grew faster at 10.8% YoY due to (i) higher traffic and labour costs and (ii) higher interest costs as Singpost raised S$200m debt in March 2010.
Recommendation
Singpost is prepared to face challenges in the mail segment. Singpost would roll out a digital mail solution in 2H11 as an alternative option as physical mail is on the decline.
New CEO (International) to drive regionalization. As Partner at McKinsey, Dr Wolfgang Baier, has been working with Singpost for the last five years and has extensive experience in Asian and Western markets. Logistics, e-fulfillment and e-commerce are three focus areas. With S$200m raised through a bond issue in March 2010, Singpost has enough financial muscle to acquire small companies regionally. Given that Singpost has a mandate to buy 10% of its shares, share buybacks cannot be ruled out either, in our view.
Maintain HOLD. Our TP of S$1.17 is based on DDM (cost of equity 7.7%, growth rate 2%). We maintain our FY12F earnings estimates and assumed annual dividend growth of 2% in the long term.
SingPost – BT
SingPost profit slips 9.6% in Q4
SINGAPORE Post (SingPost) saw net profit fall 9.6 per cent year on year to $36.97 million for the fourth quarter ended March 31, 2011, despite a 5.7 per cent rise in revenue to $141.53 million.
Excluding one-off items such as the amortisation of deferred gain on intellectual property rights, benefits from the Jobs Credit scheme and a reversal of impairment charge, underlying net profit was $34.8 million, down 4.6 per cent. Earnings per share for the quarter were 1.924 cents, versus 2.123 cents for the corresponding quarter last year.
Fourth-quarter revenue was bolstered by improved performances from both its mail and logistics business segments.
For the full year, net profit was $160.96 million, down 2.4 per cent, while revenue was up 7.7 per cent to $565.85 million.
SingPost is proposing a final dividend of 2.5 cents, subject to approval at an upcoming annual general meeting, bringing the total dividends for the financial year to 6.25 cents per share.
Ng Hin Lee, chief executive officer (postal and corporate services), said: ‘E-substitution and declining mail volumes continue to affect postal companies. One of our current priorities is to transform our mail business to meet the evolving needs of the market. In the second half of this year, we will roll out a digital mailbox solution to offer options of physical and digital mail.’
‘Over the long term, as letter-mail demand changes, the platform will enable us to retain our relationship with our corporate and walk-in customers as we migrate them to new products and services, which we term post letter-mail products,’ he added.
SingPost, which during the year acquired a 27 per cent stake in Malaysia’s GD Express Carrier, is also seeking acquisition opportunities – especially in the area of logistics – both in Singapore and the Asia Pacific.
Shares in SingPost closed at $1.16 yesterday, up one cent.
SingPost – BT
SingPost profit slips 9.6% in Q4
SINGAPORE Post (SingPost) saw net profit fall 9.6 per cent year on year to $36.97 million for the fourth quarter ended March 31, 2011, despite a 5.7 per cent rise in revenue to $141.53 million.
Excluding one-off items such as the amortisation of deferred gain on intellectual property rights, benefits from the Jobs Credit scheme and a reversal of impairment charge, underlying net profit was $34.8 million, down 4.6 per cent. Earnings per share for the quarter were 1.924 cents, versus 2.123 cents for the corresponding quarter last year.
Fourth-quarter revenue was bolstered by improved performances from both its mail and logistics business segments.
For the full year, net profit was $160.96 million, down 2.4 per cent, while revenue was up 7.7 per cent to $565.85 million.
SingPost is proposing a final dividend of 2.5 cents, subject to approval at an upcoming annual general meeting, bringing the total dividends for the financial year to 6.25 cents per share.
Ng Hin Lee, chief executive officer (postal and corporate services), said: ‘E-substitution and declining mail volumes continue to affect postal companies. One of our current priorities is to transform our mail business to meet the evolving needs of the market. In the second half of this year, we will roll out a digital mailbox solution to offer options of physical and digital mail.’
‘Over the long term, as letter-mail demand changes, the platform will enable us to retain our relationship with our corporate and walk-in customers as we migrate them to new products and services, which we term post letter-mail products,’ he added.
SingPost, which during the year acquired a 27 per cent stake in Malaysia’s GD Express Carrier, is also seeking acquisition opportunities – especially in the area of logistics – both in Singapore and the Asia Pacific.
Shares in SingPost closed at $1.16 yesterday, up one cent.
SingPost – BT Malaysia
SingPost rules out Pos stake
SingPost also says it has no plans to acquire more GD Express Carrier shares at the moment
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Singapore Post Ltd (SingPost) is not bidding for Khazanah Nasional Bhd’s 32.2 per cent stake in Pos Malaysia Bhd (4634) and will also not buy any more shares in courier company GD Express Carrier Bhd (GDEX).
The postal company, valued at S$2.2 billion (RM5.36 billion), on March 15 boosted its stake in GDEX to 27 per cent from 5 per cent as it seeks to expand in the region.
“It enables us to enhance our network and provides us with a platform to tap the growing logistics market in the region. SingPost also has no plans to acquire more GDEX shares at the moment,” it said in an e-mail response to a Business Times enquiry.
The deal raised eyebrows as it was done a day before Khazanah’s tender deadline for Pos Malaysia.
SingPost, which bought the extra GDEX shares for RM45.5 million, said it is also not eyeing other carrier players in Malaysia for now.
GDEX executive director and chief executive officer Leong Chee Tong said with the purchase, both companies can now pool resources to tap the region’s mail and bulk logistics industry.
“In future, we can explore the postal sector in the region such as in Indochina. But we have to be very patient in understanding the market and then build network because it is a well-protected sector,” Leong told Business Times in a phone interview.
He added that SingPost and GDEX are “cross bordering” currently in the logistics sides, of which SingPost is already using GDEX in making deliveries in different parts of Malaysia and vice-versa.
In a separate statement, SingPost said GDEX will continue to operate independently and there are no immediate plans to change any of the current working arrangements.
SingPost will continue to channel volume through a partner that provides good services at competitive rates.
Leong said although the industry is intensely competitive with some 100 local players, the firm is optimistic of a healthy growth in the future as it registered robust growth in the last six months.
“But, we are cautious with the latest developments in Japan. However, we expect the RM2 billion a year industry to sustain its momentum,” said Leong.
The country’s top courier companies are foreign owned with DHL, FedEx, UPS and TNT commanding a 60 per cent market share. Some 95 per cent of their business is in the delivery of mail and packages abroad.
GDEX has a market share of 4.5 per cent of Malaysia’s carrier service which includes players like Nationwide Express, SkyNet, ABX, Citylink RCS and others.
However, compared to the foreign firms, 95 per cent of the local carriers’ business are in Malaysia.
SingPost is 26.01 per cent owned by Singapore’s state-owned investment arm, Temasek Holdings Pte Ltd. SingPost operates in Australia, Hong Kong, India, Japan, Malaysia, New Zealand, the Philippines, Singapore, Taiwan and Thailand.
Meanwhile, GDEX shares closed at 81 sen yesterday after hitting an intra-day of 93 sen a share, their highest in 52 weeks. SingPost closed unchanged at S$1.1 (RM2.63) a share.
SingPost – OCBC
Seeks to expand network in Malaysia
Acquires more interest in express carrier service provider. Singapore Post (SingPost) yesterday announced that it had acquired 56.8m shares of GD Express Carrier Berhad (GDEX), a company listed on the ACE Market of Bursa Malaysia Securities Berhad, through block trades. The total consideration was about RM45.47m (~S$18.9m), or RM0.80/share, and is payable in cash. SingPost’s shareholding in GDEX will increase from 4.98% to 27.08% and GDEX will become an associated company. The weighted average price of GDEX shares on 14 Mar 2011 was RM0.82/share, which is similar to the consideration paid by SingPost, though we note that GDEX’s stock price has risen more than 40% YTD. Its NTA/share is RM0.16, based on audited financial statements for FY10.
GDEX’s network spans East and West Malaysia. GDEX is an express carrier service provider in Malaysia which offers express delivery and customized logistics services. According to its website, GDEX operates a network of 96 stations, comprising 53 branches, two affiliate stations and 41 agents throughout East and West Malaysia. The group’s net profit margin has ranged between 2.6% and 7.3% from FY06-FY10, while ROE has generally been on the uptrend from 3.7% in FY06 to about 14.0% in FY10.
Rationale for acquisition. SingPost currently has a presence in Malaysia through Quantium Solutions, its wholly-owned subsidiary which specializes in cross-border mail and logistics within the region. Its acquisition of GDEX shares should allow it to leverage on GDEX’s resources and network to grow its presence in Malaysia. It is worth noting that SingPost has been collaborating with GDEX in the logistics business and a good working relationship exists between both parties, hence increasing the chances of a successful collaboration.
Maintain HOLD. As part of its diversification and regionalization strategy, SingPost has been actively looking at M&As and investment opportunities, and we expect more of such news to come. However, pending more news and concrete details of its expansion strategy, we maintain our HOLD rating and fair value estimate of S$1.16 on SingPost for now. Meanwhile, amidst weak investor sentiment from the developments in Japan, from a tactical asset allocation point of view, investors may consider rotating into stocks such as SingPost considering its 1) stable operating cash flows with little exposure from Japan, 2) relatively lower beta, and 3) attractive dividend yield of 5.4%.