Singapore Post — Results boosted by M&A and reduced losses

Singapore Post (S08)

Last close As at 03/12/2024

SGD0.59

0.01 (0.85%)

Market capitalisation

SGD1,343m

More on this equity

Research: Industrials

Singapore Post — Results boosted by M&A and reduced losses

Singapore Post’s H1 trading was ‘resilient’, despite challenging market conditions across several of its businesses. Revenue increased by 20%, mainly due to the inclusion of the March 2024 acquisition of Border Express. This fed through to operating profit growth, which was up more than 60%. Divisional profit performance was mixed due to a number of issues but benefit was generated from internal initiatives and the postal rate increase introduced last year. However, there was no new news of the ongoing review of the Australian business.

Andy Murphy

Written by

Andy Murphy

Director, Financials & Industrials

Industrials

Singapore Post

Results boosted by M&A and reduced losses

H125 results

Industrials

7 November 2024

Price

S$0.52

Market cap

S$1.2bn

A$1.14/S$

Net debt (S$m) 30 September 2024

463.3

Shares in issue

2,249.9

Free float

78%

Code

S08

Primary exchange

SGX

Secondary exchange

N/A

Share price performance

Business description

Singapore Post is the national postal service provider in Singapore. The company provides domestic and international postal and courier services. However, its main revenue driver is now its Australian logistics operation, which accounted for 46% of FY23 revenue. Singapore Post also offers end-to-end e-commerce logistics solutions.

Analyst

Andy Murphy

+44 (0)20 3077 5700

Singapore Post is a research client of Edison Investment Research Limited

Singapore Post’s H1 trading was ‘resilient’, despite challenging market conditions across several of its businesses. Revenue increased by 20%, mainly due to the inclusion of the March 2024 acquisition of Border Express. This fed through to operating profit growth, which was up more than 60%. Divisional profit performance was mixed due to a number of issues but benefit was generated from internal initiatives and the postal rate increase introduced last year. However, there was no new news of the ongoing review of the Australian business.

Year end

Revenue (S$m)

PBT*
(S$m)

EPS**
(c)

DPS
(c)

P/E
(x)

Yield
(%)

03/23

1,872.3

75.3

0.6

0.6

83.8

1.2

03/24

1,686.7

70.5

3.0

0.7

17.4

1.4

03/25e

2,124.9

106.1

2.7

1.3

19.3

2.4

03/26e

2,198.5

125.7

3.3

1.5

15.8

2.9

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).

Singapore Post’s trading was ‘resilient’ in H125 and generated group revenue of S$992.4m, up 20% on last year, boosted primarily by the inclusion of trading at Border Express (purchased in March 2024). Operating profit increased by 62.9% to S$51.2m, implying that the operating margin increased from 3.8% to 5.2%. This was largely due to the addition of the higher-margin acquired businesses, although there were several moving parts within the figure. Furthermore, the dividend was increased by 89% to 0.34c, representing a 30% payout ratio.

In the Australia business, revenue increased by 44.1% to S$574.9m, which was mainly due to the M&A mentioned above. The organic performance was muted, with both the B2B and B2C sectors facing economic headwinds and reduced volumes. Operating profit increased by 30.2% to S$30.4m.

The International business consists of the international cross-border delivery and warehousing business and the freight forwarding business. International revenue declined by 26.8% to S$117.9m due to a difficult business environment but, after operational efficiency improvements, operating profit increased from S$3.0m to S$4.3m. In the Freight Forwarding division, revenue increased by 9.7% to S$148.7m, while operating profit declined by 29.2% to S$8.4m due to significant cost increases, specifically higher sea freight rates.

In the Singapore division, the Postal and Logistics business grew revenue by 12.4% to S$129.6m due to an increase in postal rate in October 2023, which was offset by structural declines in letter mail volume. The post office network remains unprofitable and there were additional investments made to upgrade technology and legacy systems. That said, losses were much reduced, from S$14.7m to S$0.9m. Singapore Post is working with the authorities on an operating model that will ensure the long-term viability of the postal service. The Property division increased revenue by 13.2% to S$43.0m and operating profit by 11.7% to S$23.9m due to higher rental income and an occupancy rate that increased from 96.2% at the end of March, to 98.2% by the end of September.

General disclaimer and copyright

This report has been commissioned by Singapore Post and prepared and issued by Edison, in consideration of a fee payable by Singapore Post. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Singapore Post and prepared and issued by Edison, in consideration of a fee payable by Singapore Post. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Singapore Post

View All

Latest from the Industrials sector

View All Industrials content

Research: Industrials

Information Services Corporation — Continued momentum in earnings growth

Information Services Corporation (ISC) delivered another quarter of robust growth in Q324, with revenue advancing 12% y-o-y to C$60.9m and adjusted EBITDA rising 18% to C$22.7m. Net income remained relatively flat at C$4.2m (translating to C$0.23 basic and diluted EPS) as ISC’s strong operational performance was offset by increases in share-based compensation expenses, increased investment in project delivery within its Technology Solutions segment and elevated amortisation costs related to the Master Service Agreement (MSA) extension. Management reiterated its revenue (C$240–250m) and adjusted EBITDA (C$83–91m) guidance for FY24, with our estimates remaining aligned at C$242m and C$85.5m, respectively.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free