• Singapore Post has been facing tough times, especially with its core postal services. The way people communicate has changed drastically—emails, messaging apps, and online billing have replaced traditional letters. But SingPost still has to maintain its postal network at great cost while competition from logistics and delivery services is heating up. This has forced SingPost to embark on an exercise to reshape its business model, and it finds itself at an inflexion point. • Often at such points in a corporate life, analysts can differ significantly in their views on a company's valuation and outlook. • You can see it at play:
Read excerpts below .... |
Excerpts from Maybank KE's report
Analyst: Jarick Seet
Singapore Post Ltd (SPOST SP) -- Unlocking intrinsic value
Initiate with BUY and SOTP of SGD0.74
| We believe SingPost is deeply undervalued, and now that management has moved to monetize and streamline its businesses, we see significant potential value from the sale of: 1) Famous Holdings & its Australian business; 2) SingPost Centre and post offices over the next 1-2 years. Our SOTP valuation is SGD0.86/share, and our SGD0.74 TP is based on a 15% holding co. discount. We expect further sharp rises in earnings and dividends from synergies and cost optimisation, as seen in 1H25. The conclusion of SGX’s review may also be a catalyst. Initiate coverage with BUY and TP of SGD0.74. Risks to our BUY rating are economic recession, rise in labour costs, asset monetization pricing not optimal and FX risks. |
| Asset monetisation will be key driver |
Management is moving to unlock the value of SingPost assets with proceeds used to pare down debt and any excess likely to be returned to shareholders.
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A strategic review of its Australian business is likely to be concluded by year-end.
It’s also expected to sell its freight-forwarding business.
This could generate about SGD0.9-1.1b of proceeds. This would significantly reduce finance costs and bump up future profitability.
Many of Singapore’s listed GLCs have undergone restructuring like Keppel Corp and Sembcorp Industries and share prices have risen at least 18-150% since then.
We believe SingPost will follow suit.
| Optimising Singapore postal business – 2025-2026 |
Management is finalising its operating model with the local authorities to ensure long-term commercial viability of its postal services.
It has 40-plus post office locations in Singapore which could be reduced by more than 50% and replaced by touchpoints at MRT stations and supermarkets.
This will reduce SingPost’s costs and allow them to monetize several post office assets that it doesn’t require of which more than 50% are self-owned and booked at cost.
SingPost may also merge its mailing services at SingPost Centre with its logistics centre at Tampines.
Earnings and dividends likely to surge  Jarick Seet, analystWe expect significant improvement in earnings and dividends, as seen in 1H25, even more so if it manages to sell assets and reward shareholders with special dividends as well. |
See also UOB Kay Hian's take in Oct 2024: SINGPOST: Analyst says this Singapore blue chip is "severely undervalued"
Full Maybank report here