• SingPost stock tumbled 10.7% to 50 cents yesterday after the shocking news that the company had sacked its CEO and CFO. • Is the stock fall justified? For all the drama, the company’s big plans, like selling non-core assets and boosting shareholder returns, are all driven by the board, so likely the investment thesis stays. That's according to Maybank Kim Eng.  SingPost Centre in Eunos Road, a prominent mixed-use development valued at S$1.1 billion, is likely to be sold.• Furthermore, SingPost has already smoothed things over with the customer involved in the whistleblowing case that started the series of events leading to the sacking of the CEO and CFO. SingPost has taken no major financial hit from the case. |
Excerpts from Maybank KE's report
Analyst: Jarick Seet
Opportunity to accumulate
SingPost has terminated the employment of its CEO, CFO and CEO of its international business unit as they allegedly failed to exercise due diligence and breached their duties in relation to a whistle blowing report alleging manual entries of certain delivery codes. The company has already settled with the customer involved which will not be material to its FY25E NTA and EPS and the customer’s contract has been renewed. We believe that the end-game remains unchanged as the strategic review and monetisation of non-core assets was driven by the board. The Australia business sale will likely proceed as the board believes the divestment is the best option for shareholders. We think this will be an opportunity to accumulate SingPost shares on weakness. |
| Manual entries of certain delivery codes |
Three managers with various operational responsibilities in its international business operations allegedly manually performed/approved updates of delivery failure status codes for parcels SingPost had agreed to deliver even though no delivery attempt had been made and which lacked supporting documents to avoid contractual penalties with one of its largest customers.
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The 3 managers were terminated earlier in 2024 and a police report has also been made.
A settlement has been agreed and paid to the customer which is not material to SingPost’s current year NTA and EPS.
Board-driven initiative – End-game unchanged
In July 2023, the board initiated a strategic review with a view to enhancing shareholder returns and ensuring that SingPost is appropriately valued.
| Value Proposition SingPost is the 4th-largest logistics player in Australia. Significantly undervalued with net assets worth an estimated SGD0.90/share. Profitability and dividends likely to surge in next few years. Asset monetisation will return significant value to shareholders. Beneficiary of higher e-commerce volume. |
It has identified a list of assets and businesses that are non-core to its strategy which can be monetised to recycle capital.
We believe that the proceeds from the Australia business will be returned to shareholders after paring down debt.
We also expect more asset sales going forward like Famous Holdings, SingPost centre and its post offices.
We expect potentially up to SGD0.86/sh of dividends in the next 2 years.
Accumulate on weakness  Jarick Seet, analystDespite the termination of key management, we believe that the roadmap to return shareholder value remains unchanged as it is board-driven and shareholders could potentially receive up to SGD0.86/share if all its assets are monetised. We think the downside risk is now limited and maintain a conviction BUY on SingPost for its asset monetisation story. |
Full report here.