• Following Singapore Post's recent corporate turbulence, analysts have come out to reassert their thesis that the company will continue its asset divestment plans -- and special dividends are on track. • "Despite the ongoing noise around SingPost, we believe that the roadmap to return shareholder value remains unchanged which has been affirmed by the board and shareholders could potentially receive up to SGD0.86/share if all assets targeted are monetised," wrote Maybank Kim Eng analyst Jarick Seet.• UOB Kay Hian analyst Llelleythan Tan estimates that a conservative payout of SGD 100 million would yield around 8%. • Analysts maintain a “BUY” rating on the stock with target prices ranging from SGD 0.72 to SGD 0.77 — implying significant upside potential.• In short, ignore the noise surrounding recent corporate upheavals—SingPost’s fundamentals remain strong, and special dividends are very much on the table. If all these prove correct, as UOB Kay Hian and Maybank KE believe, 2025 could be a rewarding year for shareholders! |
Excerpts from UOB Kay Hian report
Analyst: Llelleythan Tan Yi Rong
| • Australia sale still on track. Despite the changes in management, the sale of SPOST’s Australian business remains on track and is scheduled for an extraordinary general meeting in Feb 25. As a recap, SPOST announced that it had entered a sales and purchase agreement with Pacific Equity Partners (PEP) for the complete sale of its Australian business. PEP shall acquire the Australian business at an enterprise value of A$1.02b (~S$897m, around 7-8X EV/EBITDA) whereby SPOST would acquire A$776m (~S$683m) in cash and post an expected one-off gain on disposal of around S$312m upon completion. The group noted that around half of the A$776m (~S$683m) cash proceeds would be used to repay its Australian dollar-denominated debt of A$362m (~S$321m), and after accounting for future funding needs, the group mentioned that a special dividend would be considered in due course. |
Waiting to be sold: SingPost Centre in Eunos Road, a prominent mixed-use development valued at S$1.1 billion.
• Potential special dividend. Based on our estimates, assuming that all of the remaining S$362m cash proceeds are used for a special dividend, this would lead to a special dividend of around 16 S cents/share and a dividend yield of 27%.
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However, we opine that the group would prioritise future growth opportunities/deleverage its balance over a large special dividend.
Using S$100m of the remaining S$362m cash proceeds would result in a special dividend of around 4.4 S cents/share and a dividend yield of 8%.
Our base case assumes that SPOST maintains its FY26-27 dividends at the same level as FY25’s via special dividends.
• Next steps. In our view, we expect SPOST to continue its monetisation of non-core assets and businesses and maintain our expectations that Famous Holdings would be the next noncore asset to be divested in the short-medium term.
We also understand that M&As and divestments are board-driven and that the recent change would not alter the group’s strategy to divest non-core assets.
However, in our view, we reckon that the timeline and schedule of future divestments may be impacted as the new management executives take over.
Assuming a 5x EV/EBITDA multiple, we value Famous Holdings at around S$130m. Also, we value the SingPost Centre at close to S$900m and opine that any divestment/sale would likely be a minority stake sale.
EARNINGS REVISION/RISK
• We maintain our FY25-27 core PATMI estimates.
| VALUATION/RECOMMENDATION • Maintain BUY with an unchanged SOTP-based target price of S$0.72, implying a 1.0x FY26F P/B.  Llelleythan Tan, analystWe reckon that there is still potential upside at current price levels, given that the group has yet to monetise both Famous Holdings and the SingPost centre, which would further unlock shareholder value.The change in top management is unlikely to impact the group’s divestment strategy which could potentially lead to higher-than-expected special dividends. Also, further clarity on the group’s strategy moving forward would be a re-rating catalyst for the stock, in our view. |
SHARE PRICE CATALYST
• Divestment of non-core businesses.
• Larger-than-expected special dividend.
• Earnings-accretive acquisitions.
Full report here.
