Singapore Post - OCBC Investment 2020-05-11: Headwinds From COVID-19

SINGAPORE POST LIMITED (SGX:S08) | SGinvestors.io SINGAPORE POST LIMITED (SGX:S08)

Singapore Post - Headwinds From COVID-19

  • Lower dividend payout ratio on cash conservation.
  • Post & Parcel’s performance weighed by COVID-19.
  • Lower fair value estimate of S$0.80.



SingPost's 4Q/FY20 underlying net profit rose 14.6%/0.1% y-o-y

  • SingPost (SGX:S08)’s 4QFY20 revenue fell 2.7% y-o-y to S$312.2m, mainly attributable to a 5.7% y-o-y decline for the Post & Parcel segment, partially offset by growth in the Logistics segment (+5.3% y-o-y).
  • Bottomline turned from a net loss of S$75.1m in 4QFY19 to PATMI of S$7.2m this quarter due to the absence of significant impairment losses from US subsidiaries recorded last year.
  • For FY20, underlying net profit was flat at S$100.2m, which accounted for 94% of our full year estimate and was below our expectations.
  • Meanwhile, a final dividend of S$0.012/share (-40% y-o-y) has been declared. Together, total dividend for FY20 dropped 23% y-o-y to S$0.027/share, representing a payout ratio of 60%, which is at the lower end of SingPost’s dividend policy of 60-80% of underlying net profit for the year.


COVID-19 weighed on Post & Parcel’s performance-

  • On a segmental basis, the Post & Parcel’s performance was adversely impacted by COVID-19. Revenue and operating profit fell 5.7% and 47.7% y-o-y respectively in 4Q, driven by a 15.4% y-o-y fall in Domestic revenue and higher costs. Domestic admail volume was weak in 4Q and letter mail volumes continued to see double-digit percentage fall in volumes while domestic eCommerce-related volumes continued to grow.
  • For International Post and Parcel, its business was weighed by the disruption of global supply chains and higher conveyance costs amid COVID-19. In the Logistics segment, its revenue was up 5.3% y-o-y while operating profit registered a lower loss of S$2.2m, as compared to S$6.4m loss in 4QFY19.
  • Separately, the performance of the Property segment remained largely stable with revenue up 0.1% y-o-y while operating profit was down 0.8% to S$13.2m. While management noted that the SingPost Center remained at close to full occupancy rate, we see the risk of lower rental reversions and occupancy if COVID-19 continues.


Margin pressure to continue






Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2020-05-11
SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.80 DOWN 0.960



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