SINGAPORE POST LIMITED
S08.SI
Singapore Post Ltd (SPOST SP) - SingPost Centre To Deliver Technology-enabled Experience
Healthy occupancy rate on opening
- SingPost opened its new retail mall, SingPost Centre on 9 Oct 2017, after 2 years of redevelopment. This has doubled its gross retail floor space to 269k sf and net lettable area to 178k sf.
- It has achieved a healthy occupancy rate of 80.4%, helped by its convenient location, next to Paya Lebar MRT interchange station. The mall also highlights SingPost’s embracement of how technology is changing the retail landscape.
- We expect an additional rental income of SGD22m, which translates to c.SGD13m earnings at steady state of 90% occupancy. For FY18E, SingPost Centre should contribute SGD3m of earnings (3% of total) and SGD13m of earnings (10% of total) for FY19E.
- Maintain HOLD and DCF-based Target Price of SGD1.22, pending clearer direction from the strategic review of its business strategy.
- Risks: weaker traditional mail and e-commerce drag.
Convenient location that is rapidly transforming
- As mentioned, the mall is located next to the Paya Lebar MRT interchange station, which is on the East-West and Circle lines. It is set to invigorate Paya Lebar Central, which is rapidly transforming into a major commercial hub under the Urban Redevelopment Authority’s master plan.
- The mall houses up to 130 stores, including leading brands in fashion, dining, entertainment, fitness and children’s enrichment.
- SingPost Centre is managed by CapitaLand under a contract.
Technology-enabled experience
- Technology-enabled innovations were implemented:
- it introduced the first all-laser Cineplex by Golden Village, where award-winning Smart Laser projectors have been installed for superior image quality;
- At NTUC FairPrice, there are several innovations to reduce the time needed for grocery runs. The store features scan-and-go systems where customers can collect scanners and scan items as they shop before paying. A new mobile app helps shoppers identify the shortest route to the product;
- A new General Post Office offers automated services that improve operational efficiency and provides 24/7 access to postal and other essential services;
- Diners can earn rewards via the Kopitiam loyalty programme when they order healthier choice meals or return their trays at the designated counters.
Swing Factors
Upside
- Faster-than-expected turnaround of TradeGlobal, a newly acquired e-commerce enabler for fashion and lifestyle.
- Higher-than-expected revenue growth in e-commerce logistics, from more customers and services.
- Higher-than-expected margins for e-commerce logistics, from economies of scale and operating leverage.
Downside
- Inability to resolve corporate-governance conundrum, including independence of the board and inadequate disclosure.
- Failure to extract synergies and integrate its largest acquisition, TradeGlobal.
- Worse-than-expected deterioration in mail business before e-commerce logistics compensates.
John Cheong CFA
Maybank Kim Eng
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http://www.maybank-ke.com.sg/
2017-10-11
Maybank Kim Eng
SGX Stock
Analyst Report
1.220
Same
1.220
