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Post Info TOPIC: Singpost
KK


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Singpost
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ahkian wrote:

Comments :
Steady dividends as usual. Profit for 9 months increased 11% from last year.
Hope to get extra div than the usual 5c.
Share priced rose up to $1.15. At 5c and share price of $1.15, div yield is 4.3%

To date, the EPS is,

1) Q1 (Jun06) = 1.61cts
2) Q2 (Sep06) = 1.89cts - Incl. Gains fm the disposal of property
3) Q3 (Dec06) = 1.78cts

Historically, Q3 is the best Q (due to X'mas?), so if we project Q4 to be same as Q1 (shld be better but assume worst case), we shld get,

-----> EPS = 6.89cts

For last yr, SingPost paid 85% of Net Profit as div and if we assume the same 85% for this yr,

------> Div = 0.85 * 6.89cts = 5.86cts (better than 5.5cts of last yr)

So, I'm projecting aro' 6cts ttl for this yr, but got to wait till next Q to see if I'm rgt :D

At mkt price of $1.15,
 Projected Yield = 5.21% @ Div = 6cts
 Forward PE = 16.7 (shld be lower if EPS is higher)

PS. In the meantime, the mkt may be disappointed w/ the 1.25cts div for this Q and mkt price of $1.15 may be a bit toppish. But, let's hope it hits $1.2x on future growth expectations :D


 

-- Edited by KK at 00:52, 2007-01-31

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BT, Published January 31, 2007

SingPost's profit rises 4% to $34m in Q3

Revenue up 3.5% to $112m, helped by all-round improvements

SINGAPORE Post yesterday announced a 4 per cent rise in third-quarter net profit to $34.12 million.

Q3 revenue for the three months ended Dec 31, 2006, rose by 3.5 per cent to $111.8 million. The group said that this was underpinned by improved contributions from all parts of its operations.

Mail revenue contributed to the bulk of the revenue, rising 3.5 per cent to $86 million. Logistics revenue rose 3 per cent to $16.9 million, and retail revenue saw the highest growth of 12.2 per cent to $14.5 million.

The surge in retail revenue is attributed to increased contributions from financial services, retail products and vPost mail-order transactions. During the third quarter, the Infocomm Development Authority approved an increase in postage rates for domestic mail and international airmail.

SingPost has declared an interim dividend of 1.25 cents per share, payable on Feb 28. Net cash inflow from operating activities amounted to $122.6 million in the nine months of FY07, compared to $104.6 million in the corresponding period of the previous year.


With the impending expiry of its monopoly in basic mail services, SingPost said it is confident that it is well positioned to compete when the market is opened.

Chief executive Lau Boon Tuan said the company has explored opportunities for expansion in the region and signed a collaboration agreement with Pos Indonesia to explore working on four areas - channelling services, remittances, logistics and direct mail.

Hybrid mail operations under subsidiary DataPost are already operating in Malaysia and the Philippines. It recently expanded its facility in Malaysia and is looking to set up similar facilities in two other regional markets.

vPost transactions also continued to increase with more customers attracted, as the online portal tapped into new regional markets such as Malaysia and Thailand.

Finance expenses, however, rose 24.8 per cent to $2.7 million due to increased borrowings and higher interest rates.



-- Edited by KK at 21:12, 2007-01-31

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KK


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Singpost - DBSVickers
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Extracts fm DBSVickers report dated 31-Jan-07,

On the right track

We expect Singpost to perform in line with our full year estimates. In terms of outlook for FY07, we expect 4Q07 to be a much stronger quarter than 4Q06 due to (1) Chinese New Year (CNY) festival boosting the topline for the mail segment. Last year, the major impact of CNY was felt in 3Q06 while this year it would be primarily seen in higher 4Q07 revenues. (2) In 4Q07, we would see higher top and bottomline due to about 10% postage hike in Dec 06. (3) Retail and logistic segments are expected to continue growing at the same pace.

Earnings revised 3% upwards for FY08 and beyond. Singpost has taken various initiatives during 3Q07 to further develop its retail business by tying up with property and insurance companies. They have also tied up with players in Indonesia, Malaysia and other countries for regional expansion. Singpost will be further helped by corporate tax rate cut of at least 1%, expected to be announced in Feb 07.

Additional dividends could be announced on the back of strong cash flow. Singpost’s biggest strength is its cash flow, which should remain above the level of operating earnings in the foreseeable future, as capex (average 2% of sales) is not expected to catch up with depreciation (average 6% of sales). We can expect Singpost to return 3 to 4 cents with full year results in addition to the regular dividend of 5 cents. This could translate into additional 3-4% yield supplementing regular dividend yield of 5%. Singpost has already announced 3.75 cents out of 5 cents as interim dividends.

Likely impact of postal liberalisation factored in our calculations. We have assumed post-liberalisation, new entrants would emerge in the upstream business of mail collection and aggregation only. Our earlier report on Singpost dated 09-Oct, provides details of postal liberalisation and its potential impact on Singpost. We expect IDA to announce postal liberalisation in Feb 07 that will make the picture clearer.

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KK


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Singpost -
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Extracts fm Kim Eng report dated 31-Jan-07,

Sustainable good yields

♦ No surprises in 3Q results
Net profit for 3QFY07 grew 4% yoy to $34.1m, placing the group on track to achieving our full-year forecast of $133.9m. Operating revenue rose 6% yoy to $43.3m, underpinned by decent growth across all segments. EBITDA grew by a slower 3.6% yoy due to lower contributions from associates and JV companies.

♦ All segments delivered decent results
Mail revenue, which accounted for the bulk of group revenue, grew by a respectable 3.5% yoy despite a stagnant market as growth in direct mail volumes offset the ongoing decline in public mail volumes. The retail division led growth with a 12.2% yoy expansion, thanks to strong contributions from financial services offsetting the pricing pressure in bill presentment and agency services. In fact, revenue from financial services – a leading indicator of long term growth prospects – jumped 74.5% yoy to $4.2m.

♦ Well-positioned to weather deregulation
SingPost’s exclusive licence for basic mail services (letters and postcards) will expire on 31 March 2007. However, SingPost is wellpositioned to weather the deregulation as it has managed to reduce its dependence on basic mail services. Furthermore, its extensive network and proven infrastructure are key barriers to entry.

♦ Good to keep
The group is maintaining its dividend policy of paying out 80-90% of earnings, with a minimum dividend of S$0.05/share (S$0.0125 to be paid quarterly). And strong free cash flow of about $158m in the current financial year should sustain its attractive dividend payouts.

♦ Another M&A candidate?
We view SingPost as a possible takeover target as major shareholder SingTel has stated its intention to divest its remaining stake to strategic investors. Separately, SingPost will continue to be a preferred defensive play given its attractive dividend yield. Maintain BUY with a 6-month target price of $1.32 (implied FY08 dividend yield of 5%).

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Singpost - UOBKH
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January 31, 2007

3QFY07 : Financial services remains the star growth segment

SingPost reported 3QFY07 net profit of S$34.1m, up 4% yoy. 9MFY07 net profit of S$101.2m represents 74% of our FY07 forecast.

Mild 3.5% revenue growth, as mail segment expands slowly. Revenue from the retail segment, which rose 12.2% yoy, now represents 12.3% of total revenue, up from 3QFY06’s 11.5%. Within the retail segment, financial services is the star performer, recording a 74.5% surge in revenue. Remittances and EzyCash each accounted for 40% of financial services revenue. Mail recorded a mild 3.5% yoy revenue expansion, with contributions from both domestic and international mail, and accounted for 73.3% of total revenue. Logistics, the other main segment, recorded revenue expansion of a rather weak 3.0%, due to cessation of contracts that were not feasible with increased operating costs. Speedpost, which accounts for 87% of logistics revenue, recorded a mild 1.8% revenue expansion.

Retail segment drove operating profit expansion. Although the mail segment accounted for the lion share of 79.6% of operating profit, growth was weak at only 3.4% (S$1.1m) yoy. The retail segment was the star contributor to operating profit, rising 25.3% (S$0.6m) yoy, with increasing contributions from higher-value financial services.

Costs remain under control, with total expenses rising 2.8% to S$76.7m. Volume-related costs were up 8.0% (to S$27.6m) due to increased business activities – SingPost gave the example of having to pay for HP computers which are then sold through the Post Offices. Finance expenses rose 24.8% to S$2.7m, as a result of higher borrowings and higher interest rates.

Robust cashflow generation. 9MFY07 net cash inflow from operating activities was S$122.6m, versus S$104.6m in 9MFY06. This is more than sufficient to cater for capex – which was only S$5.2m for 9MFY07. SingPost’s outstanding term loan is now S$30m following the repayment of S$10m in 3QFY07.

Dividend yield remains high. An interim dividend of 1.25¢ was declared. Based on a payout ratio of 83% (management is guiding payout ratio of 80-90%, with a minimum of 5¢ ps), we are forecasting FY07 dividend of 6.0¢. This gives a dividend yield of 5.2%, which is attractive when compared against 3-mth SIBOR of 3.4%.

SingPost remains a BUY. Besides our double-digit earnings growth forecast (with higher postage rates, effective 18 Dec 06, being a key factor), SingPost is also attractive based on our DCF valuation of S$1.31 per share. The 5.2% FY07 dividend yield and undemanding FY08 PE ratio of 14.3x will also support share price.

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Competition for ezyCash
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BT, Published February 2, 2007

MAS lowers barrier for bank loans

Income limit for unsecured loans to be eased to $20,000 a year; moneylenders' rates to be freed up

(SINGAPORE) Half-a-million people on lower incomes are to be offered access to bank loans for the first time, it was announced yesterday in a statement which also removed restrictions on the interest moneylenders may charge. From the middle of the year, banks will be able to offer unsecured loans to people with an annual income between $20,000 and $30,000, the Monetary Authority of Singapore and Ministry of Law said yesterday in a joint statement.

The unsecured loan amount for these borrowers may not be more than twice their monthly income, and they may not be given credit cards or debit cards. Banks, which are supervised by the MAS, could not until now offer loans to people earning less than $30,000 a year. Moneylenders are governed by the Ministry of Law.

'The proposed changes aim to update the unsecured credit rules imposed on financial institutions to address developments within the industry and to extend the unsecured credit rules to moneylenders in line with the government's social policy of discouraging individuals from spending beyond their means,' the statement said. 'Notwithstanding this, the new rules do not seek to deny individuals who may have occasional genuine borrowing needs from all access to unsecured credit,' it added.

Moneylenders will be free to set their own interest rates, to help these lenders compete with the banks which have for years lobbied for access to people at this income level, who are estimated to number 500,000. But for unsecured loans of less than $3,000, the maximum interest rate of 18 per cent still applies.

Banks typically charge as much as 24 per cent for unsecured credit such as that offered by credit cards, although the interest rates are usually lower than this for unsecured credit lines.

'Moneylenders are free to determine the appropriate interest rate, but should note that the interest rate if found to be excessive could be revised by the court as provided in the Moneylenders Act,' the statement said. When asked what would be considered 'not excessive', a MinLaw spokeswoman told BT: 'A reasonable rate determined by market forces.' Moneylenders will also have to comply with additional rules when lending to people earning between $20,000 and $30,000 a year. The rules include a maximum credit limit of twice the borrower's monthly income.

Moneylenders will also have to check that anyone seeking to borrow more than $3,000 does earn at least $20,000 a year.

Banks welcomed the new rules yesterday, saying that they could not have come at a better time. The new lending will boost banks' income, as unsecured loans have been languishing. This form of borrowing is at much higher interest rates than mortgages or corporate loans, but banks' unsecured loans shrank 1.6 per cent in 2006 over 2005.

Spokespeople for various banks in Singapore, domestic and foreign, said yesterday that borrowers would have more choice, although the banks will be prudent in extending such loans.

Wong Chung Yee, OCBC Bank's head of unsecured lending, said the bank will 'exercise prudent lending and non-aggressive selling to this group of potential customers. 'With the alignment of unsecured lending rules between financial institutions and moneylenders, consumers now have more choices of whom they want to bank with.'

At DBS, Raymond Ang, head of unsecured loans, consumer banking, said: 'It will certainly benefit many of our POSB customers. Lending rules must be in place to protect both the interests of the bank and the customer.'

Vincent Lim, Standard Chartered Bank general manager, credit cards and personal loans, said the bank is ready to launch an instalment loan product that addresses the needs of people at this level of income. 'We believe that this will give customers in this segment access to a structured and disciplined repayment plan - encouraging healthy cash management habits,' Mr Lim said.

Maybank's head of consumer banking, Helen Neo, noted that the unsecured loan 'offers customers financing at relatively cheaper rates compared to credit cards'.



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KK


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Singapore's Postal Sector to Fully Liberalise

Singapore, 5 February 2007

Come 1 April 2007, Singapore's postal sector will be fully liberalised. The Government has decided to open the Basic Mail Services market, which includes the collection and delivery of letters and postcards, within, into and out of Singapore, after a 15-year monopoly by Singapore Post Ltd (SingPost).

With this, new players will be allowed in both domestic and international mail services. This adds greater competition to Singapore's postal sector, which has seen the liberalisation of other segments such as Express Letter Services as early as 1995. The decision will further the Government's commitment towards building an open economy and strengthening Singapore's position as a regional business hub. Liberalisation is expected to generate cost savings of S$8 million to S$25 million per year over the next two to three years, to largely benefit businesses. Today, businesses account for almost 95 per cent of Singapore's total domestic mail.

In 2004, Singapore's postal services sector generated an annual revenue of more than S$1 billion.  Total mail volume has also been growing since the 1990s, and most recently, at about two per cent per year. Liberalisation of the Basic Mail Services market will be the catalyst for greater sector growth. The newly liberalised segment presents a plethora of fresh business possibilities, including value-added services and tailored postal solutions such as letter mail tracking and staggered delivery of letters.

The Government's decision to open the Basic Mail Services market follows a public consultation in August 2006 by the Infocomm Development Authority of Singapore (IDA). Agreeing that liberalisation will be a catalyst for the postal sector's growth, the industry had expressed their support and provided inputs on the proposed liberalisation framework. Taking into account the feedback, IDA will effect key changes to promote competition, while ensuring continued provision of Basic Mail Services, public confidence in Singapore's postal system, and the protection of consumers' interests:

Key Changes to the Basic Mail Services Regime

The key changes to the Basic Mail Services regime are given below:

a) SingPost's 15-year monopoly licence will end. Thereafter, two types of licences will be available:

i. Postal Services Operators (PSOs) designated as Public Postal Licensees (PPLs), with universal service obligations such as providing island-wide letter collection and delivery services, maintaining a minimum number of post boxes and post offices for consumers' easy access, and offering service quality according to standards set by IDA.

ii. All other PSOs regardless of their service scope

b) IDA will continue to designate SingPost as the PPL. To protect consumers' interests and taking into account feasibility  and security constraints, IDA will also grant SingPost the following:

i. Letterbox masterdoor keys
To ensure that our security concerns of mail integrity and accountability are met, SingPost will continue to hold the full set of letterbox masterdoor keys. IDA will facilitate other PSOs to access SingPost's delivery network at regulated prices, terms and conditions. The PSOs may also deliver mail directly to letterboxes with no locked apertures. Going forward, if there are PPLs who would like to have direct access to letterboxes, and can propose arrangements that address the security concerns cited, IDA will be open to consider granting such PPLs with letterbox access.

ii. Right to issue national stamps
As national stamps carry the country's name and to prevent consumer confusion over which PPL the national stamp belongs to, SingPost will continue to be the only one to issue these stamps.

iii. Right to maintain Singapore's postal code system
For greater operational efficiency, Singapore will keep a centralised postal code management system. SingPost will continue to manage this centralised system, while providing access to the postal codes database to all interested PSOs.

c) The Basic Mail Services market will be opened to competition, including inbound and outbound international mail.

IDA will continue to maintain a robust competition framework to protect consumers' interests, and ensure fair play and certainty for all in the business. Following today's decision, public consultations will be conducted within the first quarter of 2007 by the Government to solicit more feedback on details of the regulatory, licensing, and competition frameworks and code.

More details on IDA's decision on the liberalisation of the Basic Mail Services market can be found at www.ida.gov.sg, under the sections "Policies & Regulations", "Consultation Papers & Decisions".



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5-Feb-2007

Liberalization terms better than expected

�� Liberalization: back to the beginning
IDA announced final terms of liberalization today evening. Key difference from the consultation paper is that masterdoor key will not be shared with new players on mail integrity concerns. This would mean however, that it would be impossible for newplayers to compete head-on with SingPost or engage in severe price competition.

�� Raising estimates by about 5-7%
We assume a net positive impact of about S$8m from the recently allowed stamp rate hike (earlier assumed nil impact on competition concerns), no further decline in ASPs (earlier assumed about 3% for three years on competition concerns).

�� Continue to expect some volume loss
We continue to build in about 10-15% loss of volume. Upside surprise could come from profits from sale of additional post offices and core mail business getting back on high single digit growth track from current low to mid single digits. Rise in long bond yield would be negative for yield stocks in general, including SingPost.

�� Valuation: S$1.35
We have raised our earnings from 6.8c to 7.1c for FY-07E, from 7.4c to 7.7c for FY-08E, and from 7.8c to 8.4c for FY-09E. Our revised valuation based on a DDM is S$1.35 and implies a current forward yield of about 5.1% versus an average of 4.7% for high-yield stocks.

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6-Feb-2007

Limited impact from liberalization

Govt to issue two types of licenses. The first license called Public Postal License (PPL) requires licensee to invest in infrastructure for mail delivery and collection and offer service quality according to standards set by the regulator. While the second license is for all other Postal Service Operators regardless of their service scope. We don’t expect any applications for the PPL license due to the high investment in infrastructure. Thus, Singpost could remain as the only PPL holder.

New entrants to target business customers in CBD area. In our view, new players would enter in the upstream activity of mail collection and target business customers in selected coverage area. We believe that business customers provide better margins and are easier to target in the concentrated business area of Singapore. New entrants would be using Singpost’s distribution network for mail delivery at the regulated price. Singpost on the other hand, in anticipation of competitors targeting the business customers, has aggressively acquired corporate mailrooms in Singapore. Out of the total market size of 300 mailrooms, Singpost has acquired over 235 mailrooms, not leaving much market for new entrants.

Global players are not expected to enter the small Singapore market. UK liberalized its postal sector in Jan 2006, and Germany and Netherlands are expected to be fully liberalized by the end of 2007. About 25 EU countries would be fully liberalized in phases till 2009. Global players are expected to focus on the multi-billion dollar EU market rather than the small Singapore market which is worth approximately S$200m, with a very strong incumbent with world-class service levels.

We estimate 15% market share loss in BMS by FY11. The liberalized segment of BMS is worth about S$200m. Taking a cue from the liberalization experience in other countries, where market share loss ranged from 0% to 30%, we estimate that Singpost could lose up to S$32m or 15% of market share in BMS (translates to about 8% of total business) with in next four years. This will be in stages with about 3% share loss in BMS next year, then 7%, 12 % and 15% in FY09-11 respectively on our estimates.

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RE: Singpost
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Extracted from UOB Kay Hian dated 2 Feb 07

Singapore Post

EzyCash business to slow in growth rate

MAS and MinLaw will lower the minimum annual income threshold for unsecured credit facilities from S$30,000 to S$20,000. A more conservative maximum credit limit of twice the borrower’s monthly income will be set for individuals in this S$20,000 to S$30,000 income group, with no access to credit cards. MAS and MinLaw will make the relevant legislative changes by mid-2007.

According to MAS, the S$30,000 minimum denies 64% of the 1.7m working population from getting unsecured credit and lowering it to S$20,000 means another 20% of the workforce will qualify for unsecured credit.

Currently, EzyCash (SingPost’s tie up with GE Money) provides unsecured lending to those with annual income of less than S$30,000. EzyCash accounts for 40% of financial services revenue, or 1.4% of total SingPost revenue. The share is small but the growth rate for financial services revenue of 74.5% yoy (3Q07) contributes to profit expansion.


With the new legislation, commercial banks will be allowed to lend to those with annual income of between S$20,000 and S$30,000. We expect this to lead to slower growth for SingPost. However, the impact on overall SingPost profitability is seen to be mild as EzyCash is a small portion of revenue and operating profit.

We have already factored in slower growth for EzyCash in our forecasts since the proposed changes were raised around Aug 2006. Hence, we are not revising our earnings on this newsflow.


SingPost remains a BUY. Besides our double-digit earnings growth forecast (with higher postage rates, effective 18 Dec 06, being a key factor) till FY08, SingPost is also attractive based on our DCF valuation of S$1.31 per share (based on 1% terminal growth rate). The 5.1% FY07 dividend yield and undemanding FY08 PE ratio of 14.7x will also support share price.

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Postal companies express interest in new licences

Firms like Royale Asia, AJ Couriers keen, likely to focus on business mail

By Bryan Lee
Feb 07, 2007

The Straits Times

A NUMBER of postal companies have expressed interest in taking up soon-to-be-available licences that will allow them to collect and deliver letters and postcards here.

However, they are likely to confine their services to the business sector which makes up 95 per cent of mail volume.

Local and international postal companies yesterday welcomed moves, announced on Monday, to open up the market in April.

They said there could be opportunities to provide slower mail services at lower rates, and services that enable big companies to use Singapore as a hub for sending out internationally bound invoices and other business correspondence.

But they expressed their dissatisfaction over a decision to let Singapore Post (SingPost) retain exclusive access to locked letterboxes that are common in HDB estates.

They said they had hoped this barrier to competition, which also affects non-regulated delivery services of magazines and printed articles, would be removed.

The basic mail services market will be liberalised on April 1, when licences for the delivery of letters and postcards will be up for grabs.

Two types of licences will be available to potential market entrants.

The first, called a public postal licence (PPL), is a 15-year licence that carries obligations to provide islandwide collection and delivery, and a minimum number of post offices and postboxes.

The second, for regular postal service operators (PSO), is a 10-year licence that allows companies to determine what level of service they want to provide.

Potential entrant AJ Couriers said it is likely to apply for a basic PSO licence to provide slower letter delivery services at rates about 10 per cent lower than SingPost's.

AJ general manager Kong Kim Kok said companies may want to save on less urgent letters and may not require SingPost's next-day service, which is difficult and costly for any company to replicate overnight.

The company delivers magazines, such as PC Magazine and Prestige, and other printed articles to homes and offices. It is also looking to deliver invoices, statements and other correspondence that its existing clients send to their customers.

Global courier company Royale Asia said it may apply for a PSO licence although its interest centres more on international mail.

Mr David Hug, who heads its local arm Royale Logistics, said large corporations could consolidate the printing of internationally bound statements and invoices in Singapore which can then be sent from here.

By contrast, there has been little, if any, interest in the PPL licence, apart from reported comments by Swiss Post, which said on Monday that it may roll out its own post offices and post boxes.

The company, which had said last year that this would be a wasteful duplication of resources, declined to comment on its remarks reported yesterday.



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Extracted from UOB Kay Hian dated 27 April 07

SingPost : BUY (Target : S$1.31)

SingPost reported its FY07 results this morning. Net profit was up 13.3% to S$139.8m. This is in line with our S$137.6m. The variance is primarily due to the S$2.2m one-off impact from the reduction in corporate tax rate from 20% to 18% on deferred taxes. Underlying net profit, which excludes profit from sale of properties and one-off tax impact, was up 7.0% to S$132.2m.

Revenue was up 5.6% to S$436m, with all the business segments maintaining their growth momentum :
(a) mail revenue rose 4.4% to S$338.4m, with improvements in contributions from domestic mail, international mail, hybrid mail and philatelic;
(b) logistics revenue grew 5.7% to S$64.3m, due to growth in Speedpost revenue and shipping contributions from vPOST online-shopping transactions; and
(c) retail revenue rising 12.1% to S$55.6m, due to higher contributions from higher-value financial services and retail products.

Operating profit rose 11.5% (or S$17.4m) to S$169.3m, with contributions from mail (+4.6% or S$5.9m) and retail (+40.1% or S$2.7m).

SingPost declared a final dividend of 2.5¢ ps for FY07. Including the interim dividends of 1.25¢ ps for each of the earlier 3 quarters, the total dividend is 6.25¢, giving a yield of 5.3%.



-- Edited by tfwee at 10:32, 2007-04-27

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SINGPOST DELIVERS GOOD RESULTS FOR FY2006/07

  • Q4 revenue up 7.3% to S$113M; net profit rose 24.8% to S$39M
  • Full-year revenue rose 5.6% to S$436M; net profit up 13.3% to S$140M
  • Proposed total annual dividend increased 13.6% to 6.25 cents per share
Strong Q4 performance - revenue grew 7.3% to S$113M; net profit up 24.8% to S$39M

The Group continued on its growth momentum, posting good results in the fourth quarter of FY2006/07. Revenue increased by 7.3% from S$105.0 million to S$112.6 million, boosted by the strong performance of all business segments   Mail, Logistics and Retail.

o Mail revenue increased 7.1% from S$82.0 million to S$87.8 million in the fourth quarter, underpinned by growth in domestic mail, international mail, hybrid mail and philatelic.
o Logistics revenue grew 5.2% from S$15.2 million to S$16.0 million, on higher Speedpost revenue and shipping contributions from vPOST online-shopping transactions.
o Retail revenue rose 8.6% from S$13.3 million to S$14.5 million. Contributions from higher-value financial services continued to offset the decline in bill presentment and payment/agency services due to pricing pressure.

As a result of the strong operational performance and continued tight rein over expenses, the Group s operating profit grew 10.5% from S$38.3 million to S$42.3 million.

For the fourth quarter, the Group achieved a 24.8% increase in net profit from S$30.9 million to S$38.6 million. This included a one-off impact from the reduction in corporate tax rate from 20% to 18% on deferred taxes amounting to S$2.2 million. Underlying net profit, which excluded profit from sale of properties and the one-off impact of the tax rate reduction on deferred taxes, increased 16.9% to S$36.3 million.

Good results for FY2006/07 - full-year revenue rose 5.6% to S$436M; net profit up 13.3% to S$140M

The Group performed well in FY2006/07. Revenue rose 5.6% from S$412.8 million to S$436.0 million, as all business segments maintained their growth momentum.
o Mail revenue, which accounted for 78% of total revenue, rose 4.4% from S$324.2 million to S$338.4 million, as all business lines   domestic mail, international mail, hybrid mail and philatelic   showed improvements in contributions.
o Logistics revenue grew 5.7% from S$60.8 million to S$64.3 million, due to growth in Speedpost revenue and shipping contributions from vPOST online-shopping transactions.
o Retail revenue increased 12.1% from S$49.6 million to S$55.6 million, as contributions from higher-value financial services and retail products offset the decline in contributions from bill presentment and payment/agency services.

Rental and property-related income increased by 13.4% from S$17.8 million to S$20.2 million in FY2006/07. This was attributed to yield enhancement initiatives undertaken by the Group over the last two years.

Other miscellaneous gains rose 53.9% from S$5.0 million to S$7.7 million. During the year, the Group disposed two properties, recording a gain of S$5.3 million. This offset the decline in interest income and trade-related exchange gains.

As a result of the good business performance and cost control, operating profit growth for FY2006/07 was strong at 11.5%, rising to S$169.3 million, from S$151.8 million in the previous financial year.

For FY2006/07, the Group achieved a net profit of S$139.8 million, an increase of 13.3% over S$123.3 million recorded in FY2005/06. Excluding gains from the disposal of properties amounting to S$5.3 million and the one-off impact of the tax rate reduction on deferred taxes amounting to S$2.2 million, the Group s underlying net profit amounted to S$132.2 million, an increase of 7.0% from S$123.5 million in FY2005/06.

Said SingPost s Group CEO Mr Lau Boon Tuan:  The SingPost Board has, over the years, guided and helped transform the Group into the commercial entity it is today. To prepare for the challenges of further postal liberalisation and to create greater shareholder value, the Board made the strategic decision to leverage our Retail network and enhance the core business. New revenue streams were generated with the diversification into financial services as SingPost continued to grow the mail and logistics business. 

Mr Lau Boon Tuan added:  In FY2006/07, we further executed on our strategy, pursuing initiatives to grow the business further. In Mail, we continued to focus on growing direct mail and attracting international publishers to print and distribute out of Singapore. We also expanded our hybrid mail business, setting up a subsidiary in Hong Kong and expanding our facility in Malaysia. For Logistics, we focused on growing our customer base. Our e-business was also extended into the region. Throughout the year, we continued to keep a close watch on our costs and also enhanced productivity and processes. All these efforts resulted in a strong 13.3% growth in net profit to S$140 million. For FY2007/08, we will also focus on driving growth, not just in Singapore but also in the region. 

Total annual dividend increased 13.6% to 6.25 cents per share

The Group s cashflow generation remained strong. Net cash inflow from operating activities amounted to S$160.9 million, compared to S$149.7 million last year.

Free cashflow (net cash inflow from operating activities less cash capital expenditure) amounted to S$152.4 million for FY2006/07, compared to S$139.4 million for the previous financial year.

With the good performance and robust cash flow, the Board of Directors is proposing a final dividend of 2.5 cents per share for FY2006/07. Together with the interim dividends of 1.25 cents per share paid in each of the first three quarters of FY2006/07, the proposed total annual dividend for FY2006/07 would amount to 6.25 cents per share.


This represents an increase of 13.6% over the total dividend of 5.5 cents per share for FY2005/06 and a payout ratio of 85.6%, which is within the target range of 80- 90% of net profit.


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Singpost - BT
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28-Apr-07

Financial, retail products boost SingPost profit

SINGAPORE Post yesterday reported an increase in revenue of 7.3 per cent from $105 million to $112.6 million for the fourth quarter of its financial year ended March 31, boosted by strong across-the-board contributions from the mail, logistics and retail businesses. Net profit for the fourth quarter surged 24.8 per cent from $30.9 million to $38.6 million. This included a one-off impact from the 2 percentage point reduction in corporate tax rate to 18 per cent.

Chief executive officer Lau Boon Tuan, who described the results as 'a good showing', said that the group's third quarter was previously always the strongest but for 2006-07 the fourth quarter beat it.

Full-year revenue climbed 5.6 per cent to $436 million. Mail revenue rose 4.4 per cent to $338.4 million, with increased contributions in the domestic, international and hybrid mail as well as philatelic sales. Overall, mail traffic went up 4.1 per cent. On the back of growth in Speedpost revenue and shipping contributions from transactions on the online-shopping service vPOST, revenue from logistics grew 5.7 per cent.

Despite a 10.9 per cent decline in contributions from bill presentment and payment/agency services, a strong performance by the higher-value financial services and retail products business which shot up 88.6 per cent ensured that retail revenue surged 12.1 per cent to $55.6 million. However, SingPost does not intend to expand its range of financial services yet.

Full-year net profit rose 13.3 per cent to $139.8 million. The group is proposing a final dividend of 2.5 cents per share. This will make the proposed total annual dividend 6.25 cents, a 13.6 per cent increase from the total dividend of 5.5 cents per share for 2005-06. Earnings per share for the full-year of 2006-07 came to 7.30 cents, up from last year's 6.46 cents.

Looking ahead, Mr Lau said that the group will 'focus on driving growth, not just in Singapore but also in the region.' It will also seek to enhance its core businesses in mail and logistics. With vPOST already launched in Thailand and Malaysia, SingPost intends to introduce a similar initiative in Australia, which Mr Lau referred to as containing a 'potential two million customers'.

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Singpost - DBSVickers
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30-Apr-07

Postman is a smart businessman

Story: Underlying net profit at S$36.3m was up 17% y-o-y and 10% above our estimate of S$33m. Particularly impressive was the growth in Mail segment due to strong momentum in direct mail and international mail. The company has proposed a

final dividend of 2.5 cents taking total dividends for the year to 6.25 cents.

Point: We are impressed by managements ability to find new avenues of growth in the industry, considered to have lacklustre prospects. We expect the company to perform well with its three-pronged strategy of growth (1) launch of new products such as property and financial services (2) expansion into new markets such as Hong Kong, Thailand and Malaysia for hybrid mail and vPost business (3) rejuvenation of existing business through sustained growth of direct mail and international mail business. A healthy outlook for the domestic economy in 2007 provides us reassurance about Singposts growth prospects.

Relevance: We have revised our earnings estimates upwards for FY08 and FY09 by 4% and 6% respectively. Maintain BUY with revised one-year DCF based (WACC 6%, terminal growth rate 1%) target price of S$1.40 that translates to 17.4x FY08 earnings. Dividend yield for FY07 stands at 5.2% and assuming dividend payout ratio of 85%, we project FY08 yield of 5.6%, which we think can go even higher, looking at the companys strong cash generation capability.



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Singpost - CIMB
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30-Apr-07

Better yields than REITs

FY07 above expectations. Full-year EPS of 7.3cts (+13% yoy) came in 6% above our forecast and 3% above consensus. Full-year DPS of 6.3cts (+15% yoy) also beat our forecast by 7%. A lower corporate tax rate helped SingPost outperform our net profit forecast.

Revenue up 6% yoy, underpinned by sustained growth in Direct Mail volume (+9% yoy), Speedpost revenue (+6% yoy), and financial services revenue (+89% yoy; bulk from remittances and ezycash). These improvements were offset by weaker contributions from Warehousing, Fulfillment and Distribution (-3% yoy) as well as Agency and Bill Presentment services.

Overall EBIT margin preserved. In fact, EBIT margins for Logistics (+80bp yoy) and Retail (+4.5% pt yoy) came in above our expectations. The cessation of contracts with higher operating costs helped Logistics achieve its third consecutive yoy EBIT margin improvement since FY04, while strong growth in higher-margin financial services lifted Retails EBIT margin.

Balance sheet strengthened. Net gearing was lower at 1.3x at end-FY07, compared to 2x a year ago, as SingPost partially paid off a S$60m term loan during the year. ROE improved to 84% in FY07 from 52% a year before. Free cash flow generated increased to S$152m from S$139m in FY06, helped by a lower net working capital/revenue ratio during the year.

Outlook. We believe SingPost is well-prepared for the liberalisation of basic mail services in Singapore this year, given its Public Postal Licensee status. We continue to see growth coming from its retail business, with SingPost leveraging its island-wide network of over 60 post offices and rolling out more products.

Maintain Outperform. We introduce our FY10 EPS forecast of 8.7cts, while finetuning our FY08-09 forecasts. Our DDM target price has been raised to S$1.38 from S$1.28 (cost of equity 6.5%; implied CY08 yield of 4.6%), as we roll over our valuation to include FY10 DPS forecasts. As a defensive stock, SingPost offers projected forward yields of 5.3-6.3% for the next three years, which are better than the average 4.4% that S-REITs currently offer.

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RE: Singpost
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Extracted from Kim Eng

Singapore Post Ltd

Mailing Generous Dividends

Healthy earnings growth Growth in FY06 sustained into FY07. Revenue grew 5.6% to S$436.0m while underlying net profit grew 7.0% to S$132.2m after adjusting for gains from the disposal of two properties and the reduction in tax rate from 20% to 18%. Underlying net profit of S$132.2m is in line with our forecast of S$133.9m. Cash flow generation was also stronger with both operating and free cash flow up 7.5% and 9.3%, respectively.

All segments performed better All three segments posted higher revenue and operating profits. Mail operating profit   which accounted for 79.5% of the group s operating profit   grew 4.6% yoy, underpinned by better performances across all business lines (domestic mail, international mail, hybrid mail and philatelic). Retail division led growth with a 40.1% yoy increase in its operating profit, thanks to strong contributions from financial services, which offset the decline in agency and bill presentment contributions. Logistics operating profit also grew 11.5% yoy with Speedpost gaining momentum in revenue generation.

Looking to foreign shores Management has stated that it intends to drive growth in Singapore and in the region. In FY07, e-business VPost was introduced into Thailand and Malaysia and is being rolled out in other markets. Regional initiatives in mail and logistics are also being pursued.

Dividends remain attractive Proposed final dividend of S$0.025/share brings FY07 total dividend payout to S$0.0625/share. This is 13.6% higher than FY06 total dividend of S$0.055/share and represents a payout ratio of 85.6%. SingPost reiterated its dividend policy of an annual dividend payout of 80-90% of net profit or a minimum of S$0.05/share.

A possible candidate for a takeover We view SingPost as a possible takeover target, as major shareholder SingTel has clearly stated its intention to divest its remaining stake to a strategic investor. SingPost will continue to be a preferred defensive play, given its attractive dividend yield. Maintain BUY with a target price of $1.34 (implied FY08 dividend yield of 5%).


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Singpost - BT
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9 Jun 07

Some postage rates set to go up

SINGAPORE Post (SingPost) will increase domestic postage rates for standard mail for the first two weight-steps of 20 grams and 40 grams with effect from July 1, to take account of the rise in Goods and Services Tax (GST).

Postage rates on all other weight-steps for local posting will remain unchanged, with SingPost absorbing the 2 per cent increase in GST, the postal operator said yesterday. Domestic postage for standard mail, both stamped and franked, will rise by one cent for both 20g and 40g weights, to 26 cents and 32 cents.

None of the money from the increase will go to SingPost itself, it said. Besides absorbing GST increases for all other weight-steps on local mail, SingPost will return one per cent of franked postage value to franked mail customers from July onwards. Buying stamps in booklets and complete sheets will also cost less - local stamps for 20g letters will cost 25.5 cents each in booklets of 10, while local stamps for 40g letters will cost 31.6 cents each in booklets of 100.

SingPost last raised postage rates on Dec 18 last year, when local postage rates rose 9 per cent, or 2 cents, to 25 cents for the 20g letters, the first increase in 11 years. For international mail, rate increases ranged from 5 to 40 cents.

Public mail volumes have shrunk by an average of 6-8 per cent per year in recent years, SingPost's senior vice-president of mail business, Woo Keng Leong, said last year when announcing the rate increases.

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Singpost - UOB Kay Hian
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SINGPOST, uob kay hian remains a BUY with target price $1.31
  • SingPost has announced that it will revise its domestic postage rates for standard mail for the first two weight-steps of 20g and 40g with effect from 1 Jul 07 to account for the increase in GST from 5% to 7%. Postage rates for all other weight-steps for local posting will remain unchanged and SingPost will absorb the 2% incremental increase in the GST rate.
  • The domestic postage rate for standard mail (stamped and franked) up to 20g will be raised from 25¢ to 26¢. For mail up to 40g, the rate will be raised from 31¢ to 32¢.
  • With this postage revision, SingPost will maintain a revenue-neutral position ie no increase in its revenue. We are therefore not making any adjustments to our earnings forecast. Our DCF valuation gives a fair value of S$1.31, and we maintain BUY on SingPost.


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RE: Singpost
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SING POST, gs remains NEUTRAL

  • SingPost announced on June 8 that its domestic postal rates will be revised effective July 1, 2007 to account for the higher Goods and Services Tax of 7% (previously 5%). Standard mails for the 20gm and 40 gm weight steps will be revised by 4% to 26 cents and 3% to 32 cents respectively. Postage rates for all other weight steps will remain unchanged.
  • We note that SingPost¡¯s 3-4% postage rate revision is higher than the 2% GST rate hike. However, the company expects to maintain a revenue neutral position from the rate revision as SingPost intends to (1) absorb the GST increase for all other weight steps (10% of the total mail volume); (2) offer 1-2% discount for higher volume purchases; and (3) return 1% of the franked postage value to franked mail customers. We believe that the company¡¯s earnings should remain relatively unchanged as (1) we do not expect EBITDA margin to be affected; and (2) we assume that the rate increase would not have a significant impact on postal volumes.
  • We believe that the market may not be surprised by the rate revision as (1) the company has similarly revised the postage rates to account for the previous GST hike in January 2004; (2) the previous rate revision had also sought to achieve a revenue neutral position. We maintain our Neutral rating as the stock is trading at a CY08E PE of 16x, in-line with the STI index¡¯s CY08E PE of 17x. We also believe the strong dividend yield of approx. 6% (CY08E) should support the share price. Our target price is unchanged.


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Date:
Singpost - Lim and Tan
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26 Jun 07

Significance Of Replacement

Sing Post announced the appointment to its Board of Lim Eng as a non-executive director. Lim Eng has been Director of Human Resource since Sept 03. Before that, he held positions of:
- President of New Century Infocomm Taiwan; and
- CEO General Business.

Lim Eng replaces Lee Hsien Yang (LHY), former CEO of Sing Tel, as its only representative on Sing Posts Board. LHY will step down as director at the Jun 29thAGM. (Sing Posts Board comprises Chairman Lim Ho Kee, CEO Lau Boon Tuan, Lee Chong Kwee, Kenneth Tan, Tan Yam Pin, Ong Ah Heng, Keith Tay and Timothy Chia.)


COMMENTS

1. One would have expected Chua Sock Koong (CSK), Sing Tels CEO since April 1st, to be the replacement for LHY, as befits an investment of this size: at $1.30 last Friday, and a new high for Sing Post shares, SingTels remaining 25.75% stake (494 mln shares) in Sing Post is worth $642 mln.

2. While nowhere as significant as Sing Tels stakes in say, Bharti Airtel, it is certainly no small beer.

3. We believe the lightweight appointment suggests Sing Tel is very close to disposing of its remaining stake, which is still strategic by any definition. And it would not be nice if CSK has to step down soon after appointment following the divestment.

4. Note that when Sing Tel sold a 5% stake in Sing Post (95 mln shares at $1.12 each) 18 months ago in Dec 05, the company statement had said the balance would be sold through a strategic sale.

5. Such a disposal could have important implications for Sing Post and its share price. The divestment prospect, and Sing Posts attractive and sustainable dividend, has been the basis for our BUY call on Sing Post. (Based on FY06/07s payout of 6.25 cents per share, 1-tier tax, vs 5.5 cents a year ago, the net yield at $1.30 would be 4.8%.)

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RE: Singpost
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¨ Impressive Q1 results
SingPost continued its strong growth momentum. Revenue and underlying EBITDA grew yoy at double digit rates of 10% and 10.5% respectively as all 3 segments: Mail, Logistics and Retail posted higher revenues and operating profits. As the growth accrued from deliberate growth initiatives undertaken by management such as promoting direct mail, mailrooms acquisition, regional expansion of hybrid mail and vPost, and introduction of financial services, we think that this growth is sustainable and led by a progressive and growth-oriented management team. We are raising our full year net profit forecast by 9%.

¨ One-off mailings did not distort performance of Mail segment
Domestic mail volume grew 9.6% yoy. Though there were some one-off mailing items included in the first quarter such as the GST Offset package, management has revealed that domestic mail volume would still have increased 8% after excluding these one-off items. The strong 10.9% improvement in overall mail revenue is thus not artificially inflated by these one-off items.

¨ Favorable conditions for growth
Increased consumer confidence from a strong economy will likely increase vPost transactions and the consumption of more financial services such as borrowing and insurance products. Sellers are also likely to advertise more, benefiting SingPost's direct mail business. Efforts to enhance Singapore's position as a publishing services hub will also increase business volume for SingPost's international mail business.

¨ Consistent improvement in operating margins
The company's focus on containing costs has also resulted in a consistent improvement in underlying operating profit margin. We feel that this discipline in monitoring productivity indicators (such as mail items delivered per postman) and containing cost warrants as another investment merit.

¨ Raising dividend forecast
Quarter one dividend of 1.25cts per share, payable on 31 August 2007 was declared. We are forecasting FY08 DPS of 7.3cts. Maintain BUY with a target price of $1.46 (implied FY08 dividend yield of 5%)


-- Edited by tfwee at 16:13, 2007-07-31

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Permalink  

Extracted from DBS Vickers.

Story: Net underlying profit of S$34.9m was up 15% y-o-y and
8% above our estimate of S$32.4m. Management has announced
an interim dividend of 1.25 cents similar to last year, payable on 31
Aug 07.

Point: Mail segment surprised on the upside with a significant
14% increase in operating profits due to (1) higher mail traffic and (2)
impact of recent price hike for public and international mail.

Relevance: We have revised our FY08 and FY09 earnings
estimates up by 6.5% and 5% to reflect higher operating efficiency
and potential gains from property sales. Maintain BUY with a
revised one-year target price of S$1.45 based on DCF (WACC 6%,
terminal growth rate 1%). A dividend yield of 6% could see a
potential upside from special dividends or capital management.

Excluding one-off gains, net profit grew significantly. Excluding one-off
gains of S$3.4m from the sale of the US business of Spring JV and disposal
of property in Singapore, net profit came in at S$34.9m, up 15% y-o-y.
Revenue grew 10% y-o-y to S$116m with growth registered across all
three-business segments. Mail segment registered the strongest growth of
11% in revenues, partly due to the higher traffic and partly due to the fee
hike in public and international mail. Retail and logistics segments
continued to grow at a healthy pace.

Property sales could lead to higher final dividends. Singpost has already
made a gain of S$7.1m from the sale of two of its HDB shop units.
Management periodically reviews the opportunity to optimize its shop
locations and make gains if possible. Singpost still owns about 15 shop
units, which can be sold for gains in a buoyant property market. We
estimate that another 4-5 shop units could be sold for gains in the next 1-2
years. With 80-90% of the net profit to be paid out as dividends, we think
dividend yield would be around 6% for FY08. With 1.25 cents interim
dividend payout every quarter, final dividend should be around 3-3.5 cents.
Additionally there could be capital reduction or special dividends at the
end of FY08, as there is room for Singpost to increase its net debt to equity
ratio to 1.5x-2.0x from projected 0.8x in FY08. This could lead to additional
6-12 cents in cash returns.

Multiple drivers for growth - both short and long term. Financial services
such as remittance, insurance, ezyCash along with property services, are
expected to drive over 10% growth in earnings in the retail segment this
year. Speedpost service and vPOST transactions are expected to help grow
logistics services by over 5%. Mail segment should see over 8% growth in
earnings from direct mail, international mail and corporate mailroom
acquisitions. In the long term (2-5 years), the company would benefit from
expansion into new markets such as Hong Kong, Thailand and Malaysia -
for hybrid mail and vPOST business


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Permalink  

Singapore Post Limited will be announcing its unaudited results for the second quarter and half year ended 30 September 2007 on 30 October 2007 after the close of trading.


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