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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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Singapore Post Ltd (SPOST SP)
Australia business sold
Maintain BUY with a higher TP of SGD0.77
SingPost agreed to divest its Australia business for AUD1.02bn to Pacific Equity Partners and will realise a gain on disposal of about SGD312.1m. Debt will also be significantly reduced to SGD350m and a special dividend is likely. We believe that majority of the proceeds will likely be returned as dividends to shareholders. With a key risk mitigated, we reduce the holding company discount on our SOTP valuation of SGD0.86/sh to 10% from 15% (see our initiation report here). This yields a higher TP of SGD0.77 from SGD0.74. Maintain BUY as we believe longer-term shareholders will be rewarded with significant dividends that could amount to more than its current share price.
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LHN Ltd (LHN SP) Make yourself at home
Core earnings a beat, retain BUY with higher TP Excluding fair value gains and other non-recurring items, FY24 core PATMI of SGD29m beat our/market expectation at 116%/106% of MIBG/street full year estimates. The stellar performance was mainly driven by strong demand for its co-living segment, which achieved a high occupancy rate of 97.5%, coupled with stable rental rates. The group declared a final DPS and special DPS of 1.0 cent each, taking total payout to 3.0 cents, translating into an attractive yield of 7.0%. We lift our FY25-26E estimates 21-22% and introduce our FY27E forecast. Our TP is raised to SGDD0.55 (from SGD0.43), based on an undemanding 7x forward P/E. BUY.
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MAYBANK KIM ENG |
UOB KAY HIAN |
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Singapore Telecommunications (ST SP) Potential for larger capital return helped by SingPost
Potential special dividends from SingPost adds to ST’s capital return arsenal Singtel’s 22%-owned associate, SingPost, announced divestment of its Australia business at an EV of ÃUD1.0b (equity value of AUD776m). SingPost said the transaction will lead to a AUD312m disposal gain. Our analyst covering SingPost, Jarick Seet, expects a special dividend of SGD360m on this transaction. This should translate to SGD79m as Singtel’s portion of special dividends. SingPost has other properties such as Freight Holdings (SGD80-100m), SingPost Center (~SGD1.2b), and SG logistic post office (~SGD300m). Jarick believes potential divestment of these properties could lead to more special dividends in the medium-long term.
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REITs – Singapore S-REITs Monthly Update (Nov 24)
The Fed is expected to proceed with rate cuts in a gradual and measured pace. Government bond yields have stabilised after the initial kneejerk surge in response to the re-election of Donald Trump as President of the US. Many blue-chip S-REITs have already corrected and are trading at attractive yields of 6-7%. Maintain OVERWEIGHT. BUY data centre REITs DCREIT (Target: US$0.95) and MINT (Target: S$3.05). BUY retail REITs FCT (Target: S$2.79) and LREIT (Target: S$0.77).
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UOB KAYHIAN |
OCBC |
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Singapore Post (SPOST SP) Leaving Australia While Creating Shareholder Value
Upon completing its strategic review, SPOST announced that it has entered an agreement to completely divest its Australian business by end-FY25. The group plans to use cash proceeds to deleverage its balance sheet which would result in significant interest cost savings and turn the group into a net cash position. The group also noted that a special dividend is in consideration in the near term. Maintain BUY with a higher SOTP-based target price of S$0.72, implying a 1.0x FY26F PB.
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Singapore Post Rating HOLD (as at 2 December 2024)
• Proceeds to be deployed towards paying down AUD- denominated debt and potentially a special dividend • Divestment is subject to shareholders’ and regulatory
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