Singapore Post - OCBC Investment 2021-09-07: A Gradual Recovery Ahead

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

Singapore Post - A Gradual Recovery Ahead

  • SingPost (SGX:S08) proposed sale of non-core asset, General Storage Company.
  • Applying an ESG valuation premium.
  • Beneficiary of border reopening and strong e-Commerce demand.



Disposal of General Storage Company and its subsidiaries (GSC) at premium

  • SingPost announced the proposed sale of General Storage Company and its subsidiaries (GSC) (4% of SingPost’s FY21 net profit) to Triforce Investment for S$85.1m. Upon completion of the transaction, which is expected to take place on 15 Oct 2021, GSC will no longer be part of SingPost.
  • The proposed disposal is estimated to result in a gain of ~S$6m after transaction costs. The proceeds would be redeployed for SingPost’s transformation initiatives and to reposition itself for long term, sustainable growth.


Margin pressure to ease gradually as flight volumes normalise

  • Performance of SingPost was weighed by declining volumes of letters and printed papers in Singapore, and higher conveyance costs for its international post and parcel business, but partially offset by strong e-commerce growth.
  • For 1QFY22, SingPost’s revenue fell 2% y-o-y to S$353m while operating profit was down 2% y-o-y to S$21m. Margins were under pressure due to low flight capacity at Changi Airport. However, as Singapore plans to reopen its borders progressively, we expect margin pressures to ease as commercial flight volumes at Changi Airport recovers. This could benefit SingPost and support its earnings recovery in FY22, together with strong demand from e-Commerce.


Valuations are undemanding

  • Valuations are undemanding with SingPost’s forward P/E and P/B trading at 18.6x and 0.99x, near 1 standard deviation below its historical average. After adjustments and applying an ESG valuation premium, our fair value estimate for SingPost increases from S$0.74 to S$0.78.

SingPost - ESG Updates






Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2021-09-07
SGX Stock Analyst Report BUY UPGRADE HOLD 0.78 UP 0.740



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......