Last close As at 06/08/2026
SGD0.34
▲ −0.01 (−1.47%)
Market capitalisation
SGD755m
Research: Industrials
The Q125 results shine a light on the latest initiatives to underpin the inherent value within Singapore Post, which include a review of the Australian operations and ongoing discussions with the Singapore government on postal services. SingPost’s transformation from a post and parcel delivery company into a global logistics operator appears to have slipped under the radar of investors and now offers an opportunity for investors to reassess its potential. Our forecasts and valuation are unchanged and we believe there is now c 60% upside in the share price.
Singapore Post |
Q1 profits more than double |
Q1 results |
General industrials |
21 August 2024 |
Share price performance
Business description
Next events
Analysts
Singapore Post is a research client of Edison Investment Research Limited |
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The Q125 results shine a light on the latest initiatives to underpin the inherent value within Singapore Post, which include a review of the Australian operations and ongoing discussions with the Singapore government on postal services. SingPost’s transformation from a post and parcel delivery company into a global logistics operator appears to have slipped under the radar of investors and now offers an opportunity for investors to reassess its potential. Our forecasts and valuation are unchanged and we believe there is now c 60% upside in the share price.
Year end |
Revenue (S$m) |
PBT* |
EPS** |
DPS |
P/E |
Yield |
03/23 |
1,872.3 |
75.3 |
0.6 |
0.6 |
70.9 |
1.4 |
03/24 |
1,686.7 |
70.5 |
3.0 |
0.7 |
14.7 |
1.7 |
03/25e |
2,124.9 |
106.1 |
2.7 |
1.3 |
16.3 |
2.9 |
03/26e |
2,198.5 |
125.7 |
3.3 |
1.5 |
13.3 |
3.4 |
Note: *PBT is normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **EPS is company basis (ie including exceptionals and post distribution to perpetual security holders).
Q1 benefits from M&A and rate rises
Q1 revenue increased 22.4% to S$494.8m, affected by several keys elements, including a full contribution from Border Express following its acquisition in March and the gearing effect of postal price rises in the core Singapore division, offset by weakness in the International and freight forwarding operations. At the operating level, profit more than doubled to S$24.4m largely reflecting the increase in postal rates in Singapore, which had a disproportionally positive impact. The operating margin expanded 200bp to 4.9% and net debt increased from S$350.4m at March 2024 to S$410.4m, due to the deferred M&A consideration.
Australia under review; Singapore Post discussions
In our initiation note, we highlighted the potential value in the group that was yet to be reflected in the share price, and the potential value of its non-core assets. In June 2024, the company announced that it would initiate a review of the Australian business, which could result in action that gives greater clarity to the value of this operation. Furthermore, SingPost is in discussions with the Singaporean government on a future operating model for postal services that could lower costs while broadening service accessibility and improving the customer experience. A conclusion to these discussions may be expected in the current financial year.
Valuation: Unchanged at S$0.72/share
Following the Q1 results we have maintained our existing estimates and our S$0.72/share valuation, which implies c 60% upside. The latest review, this time of the Australian business, is designed to highlight the intrinsic valuation of the Australian division and that could allow the market to reflect its true value in the share price. We believe that SingPost’s non-core assets, which are primarily investment properties located in Singapore, are of a similar value to the company’s entire market capitalisation, highlighting the hidden value in the company.
Q1 results highlight M&A and rate increases
The Q1 results highlighted the impact of numerous trends and changes, primarily revenue growth reflecting the inclusion of M&A, notably Border Express for the whole of the period. Secondly, profitability more than doubled, partly due to M&A, but most notably from the postal rate rise that was introduced in the autumn. These two positives were partly offset by weak underlying consumer markets in Australia, structural weakness in postal volumes in Singapore and post-COVID normalisation of volumes and rates in the International and Freight Forwarding markets. SingPost continues to make progress in other areas as well, notably on sustainability and unlocking shareholder value.
Q1 profit more than doubled
SingPost’s Q1 results, which saw revenue increase 22.4% to S$494.8m, were affected by several keys elements, including a full contribution from Border Express following its acquisition in March 2024 and the impact of postal price rises in the core Singapore division, offset by weakness in the International and Freight Forwarding operations. At the operating level, profit more than doubled to S$24.4m reflecting the elements mentioned above, with the increase in postal rates in Singapore having a disproportionally positive impact, moving from a loss in Q124 to a profit in Q125. The operating margin expanded 200bp to 4.9% and net debt increased from S$350.4m at March 2024 to S$410.4m (Q124: S$138.5m) due to the deferred consideration on the acquisition of Border Express of S$55m.
Exhibit 1: Q125 summary financial results
S$m |
Q124 |
Q125 |
% change |
Group revenue |
404.1 |
494.8 |
22.4% |
Group operating expenses |
(391.9) |
(470.7) |
20.1% |
Group operating profit before other income |
12.2 |
24.1 |
97.5% |
Other income |
(0.3) |
0.3 |
N/A |
Group operating profit |
11.9 |
24.4 |
105.2% |
Group operating margin |
2.9% |
4.9% |
200bp |
Group net debt |
138.5 |
410.4 |
196.3% |
Source: Singapore Post, Edison Investment Research
Mixed operational performance due to weak markets
In the key Australian market, FMH’s organic business (ie excluding Border Express) performed steadily in a market that was suffering from weak consumer sentiment. Its fourth-party logistics (4PL) business performed well, but this strength was offset by weakness in the third-party logistics (3PL) business. Border Express grew revenue 5.3% in the period, driven by new customer acquisitions, and operating profit increased 24.4% as profits benefited from tight cost control. SingPost also completed the merger of CouriersPlease with FMH, integrating CouriersPlease’s parcel delivery services into the FMH Group and therefore complementing the overall service with B2C expertise.
In Singapore, performance improved as e-commerce volumes rose 2.9% and higher postage rates more than offset the 8.1% decline in letter mail volumes. The post office network remains unprofitable, but following the postal rate rise, the overall business was able to report a profit, having recorded a loss in the same period last year.
The International cross-border business operated in a challenging market and ‘revamped’ its operations to focus on profitable business at the expense of lower-margin volumes. Overall, volumes declined 23.8%, but margins were maintained. In Freight Forwarding, both revenue and profit declined as volumes and freight rates contracted as the end of the pandemic spike reversed.
Exhibit 2: Operating statistics
Volumes |
Q124 |
Q125 |
% change |
Australia ('000 items) |
8,816 |
10,080 |
14.3% |
Singapore |
|||
e-commerce related |
6,771 |
6,966 |
2.9% |
Letter mail and printed papers |
95,555 |
87,784 |
-8.1% |
Singapore total ('000 items) |
102,326 |
94,750 |
-7.4% |
International |
|||
e-commerce related |
3,249 |
2,473 |
-23.9% |
Letter mail and printed papers |
359 |
277 |
-22.8% |
International total ('000 items) |
3,608 |
2,750 |
-23.8% |
Source: Singapore Post
Finally, Property revenue increased due to higher rental income generated from the SingPost Centre. Overall occupancy slipped slightly, from 96.2% at the end of March to 96.0% at the end of June.
Continued progress on sustainability
SingPost takes sustainability very seriously and to this end it made progress towards its net zero targets in the period by continuing to electrify its owned delivery fleet in Singapore and expand its use of renewable energy in Singapore and Australia. In June, SingPost commenced a three-month trial of SMRT-operated trains for postal collection and will assess both the cost efficiency and the potential carbon saving of the initiative.
In Australia, CouriersPlease has relocated to two new facilities that have been built to local Green Star standards, which incorporate sustainable features such as rainwater harvesting systems, EV chargers and a 300kW solar system. The group also won the Customer Care Award from the Express Mail Service (EMS).
The search for the keys to unlock shareholder value
In our initiation note, we highlighted the potential value in the group that is yet to be reflected in the share price, and the potential value of the non-core assets. In June 2024, the company announced that it had appointed Merrill Lynch Markets Australia as advisors to explore options with regard to the Australian business. The review is expected to be concluded by the end of the year, and could result in one of the following outcomes:
■
an IPO of all, or a minority stake in Australia,
■
a sale of all, or part of the business, or
■
maintenance of the status quo (ie management does nothing different).
Equally, other options not listed may also be suggested or considered as a way of unlocking the value.
In Singapore, SingPost is in discussions with the government on a future operating model for postal services that could lower costs while broadening service accessibility and improving the customer experience. A conclusion to these discussions may be expected in the current financial year.
Exhibit 3: Financial summary
S$m |
2020 |
2021 |
2022 |
2023 |
2024 |
2025e |
2026e |
2027e |
||
Year end 31 March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||||||
Revenue |
|
|
1,313.8 |
1,404.7 |
1,665.6 |
1,872.3 |
1,686.7 |
2,124.9 |
2,198.5 |
2,278.7 |
EBITDA |
|
|
209.8 |
141.3 |
175.3 |
175.3 |
173.4 |
222.1 |
244.1 |
254.2 |
Normalised operating profit |
|
|
141.8 |
72.5 |
100.8 |
92.7 |
92.3 |
128.0 |
150.0 |
160.1 |
Share-based payments |
(2.8) |
(3.0) |
4.5 |
0.4 |
(7.4) |
(4.0) |
(4.0) |
(4.0) |
||
Other |
4.6 |
9.7 |
6.7 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Reported operating profit |
143.6 |
79.3 |
112.1 |
93.2 |
84.9 |
124.0 |
146.0 |
156.1 |
||
Net Interest |
(5.8) |
(7.6) |
(11.4) |
(17.5) |
(20.3) |
(20.3) |
(22.8) |
(20.2) |
||
Joint ventures & associates (post tax) |
(0.1) |
1.0 |
4.8 |
0.0 |
(1.5) |
(1.5) |
(1.5) |
(1.5) |
||
Exceptionals |
(9.1) |
(12.5) |
1.9 |
(7.7) |
36.8 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
126.8 |
53.5 |
96.1 |
75.3 |
70.5 |
106.1 |
125.7 |
138.3 |
Profit Before Tax (reported) |
|
|
128.6 |
60.3 |
107.4 |
68.0 |
99.9 |
102.1 |
121.7 |
134.3 |
Reported tax |
(28.3) |
(13.3) |
(19.6) |
(29.2) |
(18.4) |
(30.6) |
(36.5) |
(40.3) |
||
Profit After Tax (norm) |
98.4 |
40.2 |
76.5 |
46.0 |
52.0 |
75.5 |
89.2 |
98.0 |
||
Profit After Tax (reported) |
100.3 |
47.0 |
87.7 |
38.8 |
81.5 |
71.5 |
85.2 |
94.0 |
||
Minority interests |
2.8 |
0.6 |
(4.6) |
(14.1) |
(3.1) |
0.0 |
0.0 |
0.0 |
||
Discontinued operations |
(12.0) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
89.2 |
40.8 |
71.9 |
31.9 |
48.9 |
75.5 |
89.2 |
98.0 |
||
Net income (reported) |
91.1 |
47.6 |
83.1 |
24.7 |
78.3 |
71.5 |
85.2 |
94.0 |
||
Basic average number of shares outstanding (m) |
2,250 |
2,250 |
2,250 |
2,250 |
2,250 |
2,250 |
2,250 |
2,250 |
||
EPS - pre distribution to perpetual securities holders (norm) (c) |
4.05 |
1.82 |
3.20 |
1.42 |
2.17 |
3.35 |
3.96 |
4.36 |
||
EPS - pre distribution to perpetual securities holders (IRFS) (c) |
4.05 |
2.12 |
3.69 |
1.10 |
3.48 |
3.18 |
3.79 |
4.18 |
||
EPS - post distribution to perpetual securities holders (norm) (c) |
3.30 |
1.15 |
2.59 |
0.94 |
1.69 |
2.87 |
3.48 |
3.87 |
||
EPS - post distribution to perpetual securities holders (IRFS) (c) |
3.39 |
1.46 |
3.09 |
0.62 |
3.00 |
2.69 |
3.30 |
3.69 |
||
DPS (c) |
2.70 |
1.10 |
1.80 |
0.60 |
0.74 |
1.27 |
1.51 |
1.67 |
||
Revenue growth (%) |
14.4 |
(-0.2) |
(-28.9) |
21.0 |
50.9 |
(-1.8) |
0.0 |
0.0 |
||
EBITDA Margin (%) |
16.0 |
10.1 |
10.5 |
9.4 |
10.3 |
10.5 |
11.1 |
11.2 |
||
Normalised Operating Margin |
10.8 |
5.2 |
6.1 |
5.0 |
5.5 |
6.0 |
6.8 |
7.0 |
||
BALANCE SHEET |
||||||||||
Fixed Assets |
|
|
1,966.0 |
2,028.4 |
2,115.2 |
2,074.3 |
2,374.9 |
2,341.3 |
2,312.7 |
2,286.1 |
Intangible Assets |
297.4 |
314.5 |
529.4 |
501.0 |
636.3 |
636.3 |
636.3 |
636.3 |
||
Tangible Assets |
441.5 |
405.4 |
412.5 |
386.9 |
454.3 |
422.2 |
395.2 |
370.1 |
||
Investments & other |
1,227.2 |
1,308.4 |
1,173.3 |
1,186.4 |
1,284.4 |
1,282.8 |
1,281.3 |
1,279.7 |
||
Current Assets |
|
|
785.6 |
693.4 |
564.3 |
763.5 |
761.0 |
864.7 |
916.9 |
970.4 |
Debtors |
262.1 |
166.4 |
234.1 |
229.8 |
252.4 |
306.1 |
308.6 |
312.1 |
||
Cash & cash equivalents |
502.8 |
508.3 |
289.0 |
496.2 |
477.1 |
529.2 |
581.0 |
633.2 |
||
Other |
20.7 |
18.7 |
41.2 |
37.5 |
31.5 |
29.4 |
27.3 |
25.1 |
||
Current Liabilities |
|
|
(756.7) |
(594.8) |
(829.4) |
(719.9) |
(698.0) |
(757.5) |
(768.8) |
(780.0) |
Creditors |
(507.9) |
(507.2) |
(668.1) |
(634.0) |
(605.8) |
(653.1) |
(658.4) |
(665.8) |
||
Tax and social security |
(40.5) |
(19.8) |
(24.5) |
(22.4) |
(10.6) |
(22.8) |
(28.7) |
(32.5) |
||
Short term borrowings |
(157.0) |
(9.5) |
(77.5) |
(1.4) |
(10.3) |
(10.3) |
(10.3) |
(10.3) |
||
Other |
(51.3) |
(58.4) |
(59.2) |
(62.2) |
(71.3) |
(71.3) |
(71.3) |
(71.3) |
||
Long Term Liabilities |
|
|
(352.6) |
(455.5) |
(705.9) |
(743.6) |
(1,017.0) |
(983.6) |
(950.3) |
(917.0) |
Long term borrowings |
(207.5) |
(312.8) |
(439.5) |
(623.0) |
(816.8) |
(816.8) |
(816.8) |
(816.8) |
||
Other long term liabilities |
(145.2) |
(142.7) |
(266.4) |
(120.6) |
(200.1) |
(166.8) |
(133.5) |
(100.1) |
||
Net Assets |
|
|
1,642.3 |
1,671.4 |
1,144.2 |
1,374.3 |
1,421.0 |
1,464.9 |
1,510.6 |
1,559.5 |
Minority interests |
(42.9) |
(47.8) |
165.3 |
7.4 |
(37.5) |
(37.5) |
(37.5) |
(37.5) |
||
Shareholders' equity |
|
|
1,599.4 |
1,623.6 |
1,309.5 |
1,381.7 |
1,383.5 |
1,427.4 |
1,473.1 |
1,522.1 |
CASH FLOW |
||||||||||
Op Cash Flow before WC and tax |
156.3 |
115.7 |
162.2 |
121.3 |
162.5 |
165.6 |
179.3 |
188.2 |
||
Returns on investment and other |
1.6 |
6.7 |
(1.3) |
(18.6) |
(38.4) |
0.0 |
0.0 |
0.0 |
||
Working capital |
24.8 |
109.3 |
(55.5) |
(8.2) |
(34.9) |
(7.4) |
2.1 |
3.8 |
||
Exceptional & other |
(5.1) |
(5.1) |
(26.2) |
6.3 |
(12.5) |
(13.6) |
(8.6) |
(8.6) |
||
Tax |
(36.3) |
(35.5) |
(24.0) |
(32.8) |
(31.0) |
(18.4) |
(30.6) |
(36.5) |
||
Other |
41.9 |
24.3 |
34.4 |
47.6 |
47.7 |
60.9 |
64.2 |
65.5 |
||
Net operating cash flow |
|
|
183.2 |
215.4 |
89.5 |
115.7 |
93.4 |
187.1 |
206.4 |
212.3 |
Capex |
(27.0) |
(21.5) |
(23.8) |
(27.7) |
(46.8) |
(54.0) |
(59.0) |
(61.0) |
||
Acquisitions/disposals |
2.1 |
(52.3) |
(33.2) |
(166.4) |
(178.0) |
0.0 |
0.0 |
0.0 |
||
Net interest |
(9.7) |
(6.0) |
(11.7) |
(15.3) |
(18.1) |
(20.3) |
(22.8) |
(20.2) |
||
Equity financing |
46.1 |
(74.5) |
(200.3) |
356.3 |
159.7 |
(33.3) |
(33.3) |
(33.3) |
||
Dividends |
(94.6) |
(53.8) |
(41.9) |
(51.5) |
(29.4) |
(27.6) |
(39.5) |
(45.0) |
||
Other |
0.7 |
0.8 |
1.8 |
4.2 |
0.3 |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
100.8 |
8.2 |
(219.5) |
215.3 |
(19.0) |
51.9 |
51.8 |
52.8 |
||
Opening net debt/(cash) |
|
|
(101.3) |
(128.6) |
(178.9) |
236.6 |
128.7 |
350.4 |
298.5 |
246.7 |
Other non-cash movements |
(73.5) |
50.3 |
(415.5) |
107.9 |
(221.7) |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(128.6) |
(178.9) |
236.6 |
128.7 |
350.4 |
298.5 |
246.7 |
194.0 |
Source: Singapore Post, Edison Investment Research
|
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Research: Industrials
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