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Post Info TOPIC: Singpost


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Singpost


Talk all about Singpost.

Investor Information

-- Edited by tfwee at 11:21, 2005-10-04

-- Edited by tfwee at 11:22, 2005-10-04

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ezyCash


Their legal loan shark activities at 18% p.a. !!
Also got processing fees $65 or 1.99% of loan, whichever is higher. Plus admin fee ($1.85 +GST) if don't do monthly repayment by GIRO. Payment protector plan at 1.25% of outstanding balance.

I wonder if SingPost is exposed to any of the loans or all risks are undertaken by their service partner. If so, very good biz for SingPost!



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RE: Singpost


I don't think Singpost will undertake the Risk of loan defaultment as the loan is issued by GE Money. I think Singpost will earn the processing fee plus some referral fee from GE Money. If that is the case, look like a good deal for Singpost. Increase their income without taking high risk.

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Recent CLSA Investor forum presentation on Singpost at HK. Give an overview of Singpost plan CLICK HERE

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Swiss Post


Friday October 14, 7:36 PM
INTERVIEW:Swiss Post To Buy Its Singapore Franchisee

SINGAPORE (Dow Jones)--Swiss Post, Switzerland's dominant mail operator, is buying its Singapore-based franchisee as part of a plan to increase its presence in the Asia-Pacific region. "Singapore is a key market for us, and we are committed to further expanding our reach in this region by using Singapore as a gateway," Swiss Post's chief executive, Ulrich Gygi, said in an interview Friday. Gygi declined to say how much Swiss Post is paying its former Singapore franchisee.

Swiss Post expects to complete by year-end the takeover of Singapore-based SPI Mail International Pte. Ltd., providing the Swiss firm with a direct presence in Singapore, Malaysia and Hong Kong. The company will then focus on expanding into new markets including China and Thailand, Gygi said. Swiss Post has also signed direct entry and international mail agreements with Singapore Post Ltd. (S08.SG) and Pos Indonesia to enhance its distribution network in Asia, he added.

Swiss Post's Asian operations will focus on delivering letters and small parcels on behalf of companies in the region, with services including mass mailing, management of mailing lists and other data, and the insertion of letters, brochures and magazines into envelopes. In future, the Asian operations may also provide consultancy services in the region, which Swiss Post already does in Eastern Europe, added Daniel Baettig, chief financial officer of Swiss Post International.

Swiss Post won't compete directly with companies like Fedex Corp. (FDX) and United Parcel Services Inc. (UPS) in Asia, as the latter are courier services and are relatively new entrants in the mail business, Gygi said.

Swiss Post's moves come as former national postal monopolies face increasing competition, not just from specialist mail and courier companies but also the use of the internet to deliver mail and documents, Gygi said. The key to survival, he said, is to protect the domestic market by offering high quality services while being innovative in providing new products and services, including those in the electronic arena. Next year, Swiss Post will introduce electronic registered mail, which will involve electronic signatures, encryption and the use of electronic keys to identify users of the system.

Swiss Post operates a network of about 2,700 post offices across Switzerland, offering delivery services as well as payments collection and financial products such as savings accounts, mortgage lending and mutual funds. Its other businesses include Switzerland's largest online search engine, search.ch.



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RE: Singpost


Extracted From Press Release from Singpost Results

SingPost Group’s unaudited results for the second quarter and first half ended 30 September 2005

• Strong Q2 operating revenue growth of 12.6%, with double-digit growth in all business segments
• Underlying Q2 net profit grew 9%
• Special dividend of 10 cents per share on top of regular quarterly dividend


Strong Q2 operating revenue growth of 12.6%, with double-digit growth in all business segments.
Building on the growth momentum in Q1 FY2005/06, the Group recorded a strong performance in the second quarter, with operating revenue increasing 12.6% from S$91.5 million to S$103 million as all business segments achieved double-digit revenue growth.

Mail revenue for the quarter grew 10.1% to S$78.5 million on higher contributions by
the domestic, international and hybrid mail business lines through various initiatives
such as direct mail.

The Logistics business returned a good showing, with revenue rising 20.2% to
S$15.1 million, mainly due to higher Speedpost traffic and increased contributions
from new customers.

Retail revenue rose strongly by 18.5% to S$12.6 million, on the back of growing
contributions from financial services, product launches/promotions such as the Harry
Potter book launch and mail orders through its internet portal, vPost.

Underlying Q2 net profit grew 9%

In tandem with the growth in business and activities, the Group’s operating expenses
rose 9.3%, due mainly to higher direct costs.
As a result of the strong business performance, the Group’s underlying net profit
grew 9% to S$28.1 million, excluding the exceptional gain arising from the disposal
of a joint venture company as well as the depreciation impact from the change in
assets’ useful lives.

Rejuvenation and reinvention to drive growth
SingPost’s Group CEO Mr Lau Boon Tuan said: “We have continued to deliver good
performance for the second quarter of FY2005/06, achieving double-digit revenue
growth in all core businesses. Building on our strengths, we will focus on our core
competencies and, through rejuvenation and reinvention of our business, drive
revenue and generate growth with minimal investments. At the same time, we will
keep a tight rein on costs and focus on processes to reap greater efficiencies.”
Examples of strategic recasts of existing products and services include MyStamp,
the Friday Mailbox Surprise! and SAMPLUS. SingPost will also continue to leverage on its retail network to offer more valueadded products and services to its customers. This includes making financial services available at more post offices, enhancing its service offerings over vPost and collaborating with partners to introduce more products through its extensive retail and distribution network. It will actively pursue and implement initiatives to grow its core businesses and maintain its strategy for controlled, quality growth.

Added Mr Lau, “We are transforming SingPost and positioning it as more than ’just
mail’. With our extensive distribution network and delivery expertise, we are wellplaced to pursue strategic initiatives that will lead to long-term growth to maximise shareholder value.”

Special dividend on top of regular quarterly dividend


SingPost will pay out a special dividend of 10 cents per ordinary share, amounting to
approximately S$191 million. This is over and above the regular quarterly dividend
of 1.25 cents per ordinary share, or about S$24 million, for the second quarter ended
30 September 2005.

The main reason for the special dividend to shareholders is to achieve a more
optimal capital structure. The company has taken into consideration factors
including its credit rating, financial performance and condition, capital expenditure
and investment requirements, funding sources and borrowing costs. The company
expects to retain a strong investment-grade credit profile after the special dividend
distribution.

Said Mr Lau, “By making the special dividend payout, we are increasing shareholder
returns while maintaining financial flexibility.”

SingPost’s dividend policy remains unchanged. Barring unforeseen circumstances,
the company will endeavour to make a total annual dividend payout of 5 cents per
share or 80 – 90% of net profit, whichever is higher.

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SINGAPORE (Standard & Poor's) Oct. 28, 2005--Standard & Poor's Ratings Services today revised the outlook on Singapore Post Ltd. (SingPost) to negative from stable. At the same time, Standard & Poor's affirmed the corporate credit rating on SingPost at 'AA-'. The outlook revision is driven by SingPost's recent announcement that it will distribute special dividends of Singapore dollar (S$) 191 million (US$112 million), which could result in further debt to fund its operations.

"The negative outlook reflects the potential of a rating downgrade within the next two years because of the possibility that SingPost's increasing focus on delivering shareholder returns could materially weaken its financial profile," said Standard & Poor's credit analyst Yasmin Wirjawan. "For example, in future the company might again obtain new borrowings to fund its operations, resulting in a significant increase in its leverage position given its high dividend payout. Or, it might choose to use predominantly short-term debt, thus affecting its liquidity position," she added.

The rating on SingPost continues to be underpinned by its very strong market position in its core postal business, high operating efficiency, and strong cash flow protection measures. The rating is partly constrained by the geographical concentration of its businesses largely within Singapore, particularly because demand for most of these businesses is closely linked to the economic performance of the service area.

SingPost has solid cash flow protection. Its ratios of funds from operations to total debt and EBITDA interest cover for fiscal 2005 remain strong at 48% and 28x, respectively. These ratios are expected to weaken moderately following additional borrowings, but they should recover gradually in the medium term in the absence of any major shift in the company's business or financial policy.

"Nevertheless, the 'AA-' rating on SingPost reflects Standard & Poor's expectation that the company is likely to preserve its financial strength in the medium term," Ms. Wirjawan said. "The outlook could be revised to stable if the company is able to maintain its solid market position and improve cash flow measures amid increasing competition due to the upcoming postal liberalization."

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search.

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BROKER CALL Singapore Post raised to 'buy'; fair value 1.34 sgd - DBS Vickers
31 October 2005, 09:29

SINGAPORE (XFN-ASIA) - DBS Vickers Securities has upgraded its rating on Singapore Post Ltd to "buy" from "hold" with fair value estimated at 1.34 sgd after the company posted strong second quarter to September results.

Singapore Post said Friday that its second-quarter net profit rose 2.4 pct year-on-year to 30.14 mln sgd as operating revenue grew 12.6 pct to 103. 01 mln.

Excluding exceptional items in both years, underlying net profit growth was up 9.0 pct to 29.07 mln sgd, it said.

Apart from the strong set of results, Singapore Post also declared a special dividend of 0.10 sgd per share on top of its regular quarterly dividend of 0.0125 sgd per share.

"In light of the bright prospects ahead for Singapore Post, we have revised our earnings estimates for years to March 2006 and 2007 by 6.2 pct and 6.1 pct respectively," DBS said.

At 9.15 am, Singapore Post was up 0.05 sgd or 4.46 pct at 1.17 with 4.85 mln shares traded.

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Singpost - CIMB


Extracts fm CIMB Report date 31-Oct-05,

Surprise in the post


  • Above expectations. SingPost reported a strong set of 2Q06 operating results. Excluding exceptional gain of S$3.7m last year and the impact of lower depreciation charges after the extension of the useful lives of certain assets, net profit still grew 9% yoy to S$28m. This came on the back of double-digit revenue growth from all business segments, partially offset by higher direct expenses and interest cost. Cashflows remained strong, with 1H06 net operating cashflow up 31% to S$62m, from S$47m a year ago. 

  • Financial services gaining traction. Retail revenue rose strongly by 18% yoy in 2Q06, mainly due to growing contributions from financial services, product launches/promotions such as the Harry Potter book launch. Mail revenue grew by 10% yoy to S$79m, driven by international mail (+17% yoy). Within domestic mail, SingPost has successfully grown its direct mail business, which rose 7% yoy in volume to help offset the volume decline in public mail. Logistics revenue increased by 20% yoy to S$15m, due to higher Speedpost traffic, new customers and the fuel and security surcharge implemented since Dec 04. 

  • Surprise dividends; target price raised to S$1.25 ex-dividend. SingPost is declaring a special dividend of 10 cts per share (S$191m) on top of its regular quarterly dividend of 1.25 cts, to optimise its capital structure. This will raise its gearing level from 0.4x to 2x (by Mar 06), but should not pose a problem to its interest servicing ability with its expected strong cashflows. We are raising our EPS estimates for FY06-08 by 2-10%, and believe net profit should still grow by 5-6% in FY07-08 even after factoring in potential higher net interest costs. Its WACC is now lower as it replaces higher-cost equity capital (over 8%) partially with lower-cost debt (around 3%). With continued growing operating cashflows and a lower cost of capital, our new DCF-based price target is raised to S$1.25 (ex-div, WACC of 5.4%) from S$1.12. With a total return of 22% including the announced dividends, maintain Outperform.


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RE: Singpost


Extracted from ChannelNewsasia.

SingTel cuts stake in SingPost, plans to sell remaining shares

SINGAPORE : Singapore Telecommunications Ltd has reduced its stake in Singapore Post Ltd and plans to sell its remaining SingPost shares.

In a statement on Monday, SingTel said it placed 95 million SingPost shares at S$1.107 each for a total of S$105.2 million.

The move has cut SingTel's stake in the firm to 25.87 percent from 30.85 percent.

SingTel added that the deal was in line with its strategy of divesting non-core businesses.

The company plans to sell the remaining shares through a strategic sale but will observe a six-month lock-up period. - CNA/de

Comment: Singpost has been a milking cow for Singtel as the dividend pay out by Singpost is attractive. With a 10 cents dividend approaching and Singtel plans to cut stake in Singpost. Singpost may see some sharp share price movement in the coming weeks. Stay a look out of the share price.

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Singpost - CSFB


Extracts fm CSFB Report dated 14-Dec-05, 


  • Having geared up to 180% to pay its special dividend, we think that one of the remaining capital management exercises that SingPost could do is to securitize Singapore Post Centre (SPC).
  • Using the commercial benchmark of a 5% cap rate, we believe the market will pay S$453 mn for SPC, but as SingPost has to pay a 10% caveat to HDB, it will only receive S$408 mn. 
  • But if SingPost hangs on to SPC, it stands to reap S$451 mn in rental (discounted at a similar 5% WACC).
  • Hence, we believe SingPost is unlikely to securitize SPC, which reinforces our NEUTRAL rating. We do not expect its gearing to drop below 100% until 2009, and short of securitizing SPC, we do not see further positive triggers in the near term. Valuations are not cheap at 17-18x PE, but we see support from the 5% yield.
  • For more interesting plays on capital management, we will prefer SingTel or StarHub.


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Singpost - Lim and Tan


Extracts fm Lim and Tan Report dated 17-Mar-06,

More To It Than Ezycash


  • GE Money’s CEO expects the on-going review of the money-lending regime by the MAS and the Ministry Of Law could result in banks being allowed to extend unsecured credit to people earning less than $30,000 a year.
  • GE Money does not come under MAS’ purview, as are banks, which can only extend unsecured credit to people who earn at least $30,000 and credit is capped at twice the applicant’s monthly salary. Interest rates are capped at 18% pa.
  • GE Money launched ezycash (targeted at people with minimum salary of $1,600 a month or $18,000 pa, and interest rates of up to 21.48% pa) in Feb ’05, and has since extended about $100 mln to more than 18,000 customers. GE Money’s ezycash is available at 17 of Sing Post’s post offices. Target is 20 by end ’06, when loan book is expected to have grown to $140 mln.
  • GE Money will launch James this month, targeted at people earning at least $30,000 pa, with interest rates of up to 14.88%. Maximum loan is $18,000, vs $12,000 maximum for ezycash customers.
  • GE Money, which is part of General Electric US, has 118 mln customers in 50 countries around the world.

COMMENTS


  1. We believe opening up the market for unsecured loans to people earning less than $30,000 a year, to banks (and not just to GE Money) is an enlightened move by the authorities. (Currently, 1.5 mln working population earn $1,600 & above per month, and bankers estimate there are 500,000 customers in the $18,000 - 30,000 annual income bracket.)
  2. While this would appear to be negative to GE Money, and hence Sing Post, through whose post offices such loans are disbursed, 2 points are worth noting:

    • Sing Post share price was affected when BusinessTimes picked up the story on Feb 28th, dropping 3 cents to $1.19, but recovered by the end of the day to $1.21;
    • Contributions from new business ventures (of which ezycash is but one) represent such a small part of Sing Post’s profitability (5% of total operating profit in the 9 months to Dec ’05), and understandably so since Sing Post’s primary and highly cash generative business is mail.

  3. Indeed, Sing Post’s resilience has been quite remarkable: at $1.23 on Wednesday (but down 2 yesterday), it was trading at effectively the highest since listing, after adjusting for the latest 10-cent special.
  4. Finally, it is worth remembering it will soon be June, when we should hear of Sing Tel’s disposal of its remaining 25.87% stake in Sing Post (or 494 mln shares), which its management had said, through a “strategic sale”. (Sing Tel placed out 95 mln SingPost shares on Dec 11th at $1.12 cum-special dividend, each.)
  5. We therefore maintain our BUY call. The minimum net yield at $1.21 is still a respectable 4.1%.


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RE: Singpost


Thursday April 27, 5:48 PM
Singapore Post 4Q Net Profit S$30.9M Vs S$26.7M -2-

SINGAPORE (Dow Jones)--Singapore Post Ltd. (S08.SG) said Thursday its fourth-quarter net profit rose 15.8% from a year earlier, driven by double-digit growth in revenue.

Net profit for the three months ended March 31 was S$30.9 million, compared with S$26.7 million a year earlier, the postal services company said in a statement.

(MORE TO FOLLOW) Dow Jones Newswires

April 27, 2006 05:17 ET

Singapore Post 4Q Net Profit S$30.9M Vs S$26.7M -2-

Fourth-quarter revenue rose 11.3% to S$105 million from S$94.3 million a year earlier.

Mail revenue grew 9.1%, while revenue from the company's logistics arm rose 11.9%, and retail revenue grew 18%.

Full-year net profit rose 12% to S$123.3 million, from S$110.1 million a year earlier.

The company declared a final dividend of 5.5 Singapore cents a share, up from 5 Singapore cents a share.



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Singpost - Kim Eng


Extracts fm Kim Eng Report dated 28-Apr-06,

Good to keep

Results ahead of expectations - Underlying net profit (excluding exceptionals and change in depreciation policy) grew by 8.3%yoy to $115m, ahead of our expectations. Operating revenue rose 9.8% against a flat performance previously, thanks to the strategic move to reinvent and rejuvenate existing businesses. Operating leverage and stringent cost control helped maintain operating margin at the attractive 34.8%.

All business segments enjoyed respectable growth - Mail revenue, which accounted for almost 80% of group revenue surprised with a 7.6% growth despite a stagnant market. Logistics division was the star performer with revenue growth of 14.7% and that of retail division rose 14.6%. Leveraging on its extensive network, brand equity and deep penetration into the HDB heartland, SingPost has successfully transformed from a boring to alluring stock.

Final dividend of 1.75cts exceeded guidance - While the group were guiding for a total normal DPS of a least 5cts (1.25cts to be paid after each quarter), it has decided to top-up another 0.5cts for Q4. Total payout ratio of 85% fell within the target range of 80– 90% of net profit. A special DPS of 10cts has been paid after 3QFY06.

An attractive acquisition target? - Following SingTel’s recent stake reduction from 30.9% to 25.9% (placement of 95m shares at $1.15/sh). We expect further disposal through a strategic sale after the 6-month lock-up period from 12 Dec 2005. The entry of a strategic investor could be positive for SingPost particularly if it can propel the group into a global player.

An excellent scorecard - SingPost has silenced many critics who ignored the stock for its lack of growth. Over the last 2 years, management has successful rejuvenated the group and at the same time, optimised its capital structure through generous cash payout. The stock now offers an attractive average ROIC and ROE of 22% and 51.7% respectively. Maintain BUY with a 6-mth price target of $1.30 (implied 2-yr average dividend yield of 5%).



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RE: Singpost



From Singpost website


Strong 8.5% revenue growth to S$105M


SingPost maintained its quarterly growth momentum for revenue in the first quarter of FY2006/07, recording an 8.5% growth.
Revenue rose from S$96.8 million to S$105.1 million, making it the first time the
Group crossed the S$100.0 million mark in its first quarter performances since its listing in 2003.


Mail revenue for the quarter grew 5.4% or S$4.2 million, from S$78.2 million to
S$82.4 million, on the back of improved performances by all business lines namely domestic mail, international mail, hybrid mail and philatelic. Logistics revenue rose 11.0% from S$13.5 million to S$15.0 million, due to higher contributions from


Speedpost, warehousing, fulfillment and distribution. Retail business registered a strong growth of 15.6% from S$11.4 million to S$13.2 million in the first quarter. This was attributed to increased contributions from financial services, Retail products and vPOST mail-order transactions, which offset the decline in agency/bill presentment revenue.


Said Mr Lau Boon Tuan, Group Chief Executive Officer of SingPost: "Our core businesses continued to perform well in the first quarter, sustaining the growth momentum achieved over the past quarters, in spite of challenging conditions which include continued declines in public mail volumes and pricing pressure in agency/bill presentment services."


Net profit grew 5.0% to S$31M


As a result of the improved business performance, the Group achieved an operating profit growth of 8.8% from S$36.2 million in the first quarter last year to S$39.4 million.


Net finance costs increased 91.4% to S$2.4 million due to higher interest expenses as a result of the higher interest rate environment and higher borrowings. Interest income was also lower, along with the reduced cash holdings.


Despite lower contributions from associate and JVs and higher net finance costs, net profit grew 5.0% from S$29.5 million to S$30.9 million in the first quarter.


Focus on execution excellence and extending regional reach


SingPost will continue to drive growth in its core businesses by pursuing and implementing initiatives in direct mail, mailroom management, MyStamp and Speedpost Express. It will also focus on rolling out higher value products and services to its customers.


Added Mr Lau Boon Tuan: "While we continue to grow our business and to seek new revenue streams, we will also focus on execution excellence to maintain our growth momentum. Cost management and productivity improvements will receive heightened focus, to improve our operating leverage. We will concurrently extend our regional reach by leveraging on our core competencies and existing businesses in the region."


The Group is extending its regional reach with initiatives to roll out the hybrid mail and vPOST businesses into the regional markets. Its hybrid mail business, under its subsidiary, DataPost Pte Ltd, has set up printing facilities in the Philippines and Malaysia. SingPost is also tying up with key partners in the region for online shopping, through its internet portal, vPOST.


Q1 dividend of 1.25 cents per share


The Group’s cashflow generation remained robust. Net cash inflow from operating activities amounted to S$36.5 million in the first quarter, compared to S$35.8 million for the previous year.


SingPost’s Board of Directors has declared an interim quarterly dividend of 1.25 cents per ordinary share (tax exempt one-tier), payable on 31 August 2006.


 


Comments :


Quite a average quarter, but they delivered the min quarterly dividends.
Now 25% of revenue comes from other biz outside mail.
March next year, they would loose this monopoly.
Quite impress with the JAMES advertisments, think it will make $$.


Re-thinking my position with this counter.
Need to find out more about its JVs.



-- Edited by ahkian at 23:33, 2006-07-24

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Extracted from UOB Kay Hian

Singapore Post

Modest earnings growth with retail being the star segment SingPost reported 1Q07 net profit of S$30.9m, up 5% yoy. This is in line with expectations and represents 25% of our FY07 forecast.
Revenue expanded 8.5% yoy. This was driven by the 15.6% increase in retail revenue, which now accounts for 11.9% of total revenue. Mail, which accounts for 74.5% of total revenue, recorded a lacklustre 5.4% revenue growth (on the back of a 6.8% volume expansion), due to continued flatness in domestic mail revenue. Within the mail segment, international mail contributed the bulk of revenue growth, rising 9.5%, due to higher outgoing international mail volumes.

Financial services contributed to operating profit expansion. Mail, whose operating profit rose 6.1% yoy, accounted for the lion share of 82.5% of operating profit. The retail segment was the star contributor to operating profit, rising 77.8% yoy, despite impact of pricing pressure in agency/bill presentment services. This was attributed to the 151.8% yoy jump in financial services revenue. EzyCash (unsecured lending to those with annual income below S$30k) is one of the largest contributors to the financial services segment. For SpeedCash, 3 of the existing 4 outlets have broken even.

Net finance costs doubled to S$2.4m due to the higher interest rate environment. However, management indicated that they are comfortable with the current net debt to equity ratio of 1.8x. We are also not too concerned as the interest cover is a relatively high 13x. High dividend yield. An interim quarterly dividend of 1.25¢ was declared. Based on a payout ratio of 89% (management guided payout ratio of between 80-90%), we are forecasting FY07 dividend of 6¢, translating to a dividend yield
of 5.8%. This is very attractive when compared against 3-mth SIBOR of 3.6%. Looking ahead, we expect the retail segment to continue to shine. We believe the retail segment (driven by financial services) could account for up to 8% of operating profit share by FY09 (versus 4.6% in 1Q07).
Our DCF valuation of SingPost gives a fair value of S$1.23 per share (translating to a 18% share price upside). This is premised on our assumption of new services such as EzyCash and James offsetting relative flatness for the mail segment.


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Singpost - UOBKayHian


Extracts fm UOB Kay Hian Report dated 2-Oct-06,

Moving into the property transaction business

SingPost and ERA Realty Network of Hersing Corporation have signed an agreement to offer a new service to customers. Known as PostREALTY, this one-stop service is a convenient and reliable new channel for customers to buy, sell and rent public and private residential and commercial properties at post offices.

This service will initially be offered at three of SingPost’s branches, namely Ang Mo Kio Central Post Office, Marine Parade Post Office and Toa Payoh Central Post Office from 16 Oct 06 (SingPost currently has 62 branches). A dedicated team of service staff from ERA Realty Network will be stationed at these post  offices to assist customers with enquiries and property transactions.

We view this partnership positively, as SingPost has tied up with a leader in the business. ERA Realty Network currently enjoys leadership position in HDB resale transactions and private resale market, capturing an estimated 35% of the market.

More importantly, this partnership reinforces SingPost’s diversification strategy to leverage its wide retail network to offer more value-added products and services. We can expect SingPost to announce more of such similar initiatives in future.

Market concerns are unwarranted. Some market players are concerned that the impending opening of the low-income (<S$30k per annum) unsecured lending market to commercial banks will mean more competition for SingPost’s EzyCash. We feel likewise too. However, it should be noted that the retail segment accounts for only 4.5% of FY06 operating profit, and EzyCash is but one portion within the retail segment. Hence, we believe the impact on SingPost’s earnings will not be significant.

The other concern of market players is that the exclusive postal licence will expire on 31 Mar 07. Our view is that other players are unlikely to enter into a market which is relatively small, and compete with SingPost which has an elaborate postal infrastructure setup. Hence, we expect minimal impact on postal earnings upon expiry of the exclusive licence.

Divestment of non-core assets progressing. Separately, SingPost announced that it has completed the sale by tender of its HDB shop unit at Marine Parade Central. The net book value of the property is S$0.83m, and the sale price is S$5.68m, giving a gain on disposal of S$4.78m.

SingPost remains a BUY. Our DCF valuation gives a fair value of S$1.23 per share. Based on a dividend payout ratio of 89% (management guided payout ratio of between 80-90%), we are forecasting FY07 dividend of 6¢, translating to a dividend yield of 5.9%. This is very attractive when compared against 3-mth SIBOR of 3.4%.



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RE: Singpost


Extracted from DBS Vickers

Singapore Post
Expect limited competition

Story: IDA may fully liberalize Basic Mail Service (BMS) market in one single step with effect from Apr 07.

Point: However, security concerns over sharing of masterdoor key for HDB letterboxes could prevent entry of new players in downstream activity (mail delivery) limiting their role as mail aggregators. We expect market share erosion for Singpost to be gradual and limited.

Relevance: Maintain BUY with a DCF derived 1-year target price of S$1.12 (previously S$1.24) based on 6% WACC and 1% terminal growth rate. This translates to a dividend yield of 5.5%.

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Singpost - Morgan Stanley


SINGAPORE (XFN-ASIA) - Morgan Stanley said it has upgraded its rating on Singapore Post to "overweight" from "equal-weight" and raised its target price for the stock to 1.19 sgd per share from 1.15 previously as it believes the market has already factored in the negative implications of the impending liberalization of the basic mail delivery business in Singapore.

"We think the recent sharp decline in the share price is excessive and (believe that) the market has fully factored in the potential earnings downside should a strong competitor arrive on the scene upon postal liberalization," Morgan Stanley said in a note.

"In fact, we think its unlikely that a strong global operator will emerge and successfully challenge the efficient incumbent postal operator in such a small market," it added.

"Moreover, we think high infrastructure set-up costs, license fees and banker's guarantees are likely to deter strong global operators from entering the liberalized market post March 2007," it said.

At 10.24 am, Singapore Post was flat at 1.00 sgd with 3.65 mln shares changing hands.

(1 usd = 1.58 sgd)

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RE: Singpost


Second Quarter FY2006/07 ended 30 September 2006

The Group’s revenue grew 3.5% from S$103.0 million to S$106.6 million in the second quarter ended 30 September 2006. All business segments recorded improved performances:
♦ Mail revenue rose 1.7% from S$80.8 million to S$82.2 million, on higher contributions from domestic mail, international mail and hybrid mail.
♦ Logistics revenue was up 2.7% from S$15.5 million to S$15.9 million, on the back of increased contributions from Speedpost.
♦ Retail revenue grew 14.1% from S$12.3 million to S$14.0 million. Growing contributionsfrom financial services, retail product revenue and vPOST mail-order transactions offset the decline in bill presentment and agency services.
Rental and property related income rose 14.1% from S$4.5 million to S$5.1 million. The Group continued to benefit from property yield enhancement initiatives. During the second quarter, the Group recorded a gain of S$4.8 million from the sale of a non-core property.

The Group continued to monitor cost increases closely. In the second quarter, total expenses increased 2.8% from S$73.2 million to S$75.3 million. Volume-related costs were higher in tandem with the increased business activities, rising 5.4% from S$24.5 million to S$25.8 million. Labour and related costs were slightly higher by 1.5% from S$28.1 million to S$28.5 million. Finance expenses rose 36.7% from S$2.0 million to S$2.8 million, due to higher interest rates and higher gearing.

As a result of the good operating performance and gain from sale of property, the Group’s operating profit grew 21.4% from S$36.5 million to S$44.3 million. Mail operating profit improved by 1.9% from S$31.4 million to S$32.0 million. Logistics operating profit rose 16.0% from S$2.1 million to S$2.4 million, due to an improvement in its contracts’ average margins.

Retail operating profit increased by 67.7% from S$1.4 million to S$2.3 million, due to growing contributions of higher value financial services. Share of profit of associated company and joint ventures improved by 6.7% from S$2.2 million to S$2.4 million although the Spring JV continued to face pricing pressure and strong competition.

For the second quarter of FY2006/07, the Group achieved an 19.9% growth in net profit from S$30.1 million to S$36.1 million. Excluding the gain from the sale of property, the Group’s underlying net profit rose 4.0% from S$30.1 million to S$31.3 million.

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Singpost - UOBKayHian


Extracts fm UOBKayHian report dated 1-Nov-06,

2QFY07 : Financial services remains the star growth segment

SingPost reported 2QFY07 net profit of S$36.1m. Underlying net profit of S$31.3m, which excludes the S$4.8m gain on sale of a non-core property, was up 4% yoy, and in line with expectations.

Revenue rose 3.5% yoy to S$106.6m. Revenue from the retail segment, which rose 14.1% yoy, now represents 12.5% of total revenue, up from 2QFY06’s 11.3%. Financial services, which comes under the retail segment, recorded a 105% yoy surge in revenue. 80% of financial services revenue came from remittances and EzyCash. Mail recorded a mild 1.7% yoy revenue expansion, due to growth in direct mail, mailroom management activities and higher outgoing international mail volumes, and accounted for 73.3% of total revenue. Logistics revenue, on the other hand, was up 2.7% yoy, on the back of increased contributions from Speedpost.


Retail segment drove operating profit expansion. Although the mail segment accounted for the lion share of 72.3% of operating profit, growth was weak at only 3.9% (S$2.5m) yoy. Once again, the retail segment was the star contributor to operating profit, rising 60.2% (S$1.5m) yoy, with increasing contributions from higher-value financial services. Management indicated that steps have been taken to keep expenses low, which led to expenses rising a mild 2.8% yoy.

Robust cashflow generation. 1HFY07 net cash inflow from operating activities was S$74.6m, versus S$61.6m in 1HFY06. With the strong operating cashflow, as well as low capex needs (capex estimated at less than 5% of revenue), SingPost made a partial S$20m repayment of the S$60m term loan.

Although SingPost’s net debt to equity ratio of 1.7x may appear high, its interest coverage of 16.9s is at an acceptable level.


Dividend yield remains high. An interim dividend of 1.25¢ was declared. Based on a payout ratio of 85% (management is guiding payout ratio of 80-90%, with a minimum of 5¢ ps), we are forecasting FY07 dividend of 6¢. This gives a dividend yield of 6%, which is attractive when compared against 3-mth SIBOR of 3.5%.

With regards to the 31 Mar 07 expiry of the exclusive right of SingPost for Basic Mail Services (letters and postcards), SingPost management sees itself as well positioned to address the challenges of postal deregulation.

We have raised our FY07 net profit forecast by 4.7% to S$134m primarily to factor in the one-off gains from property sale. Our FY08 and FY09 net profit forecasts have also been finetuned.


SingPost remains a BUY. Despite our mild earnings growth forecast of midsingle digit pa, SingPost remains attractive based on our DCF valuation of S$1.23 per share. The 6% FY07 dividend yield and undemanding FY07 PE ratio of 14.2x will also support share price.



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SingPost - DBSVickers


Extracts fm DBSVickers report dated 1-Nov-06,

Margins Going Upside

Improved margins and healthy cash flow. Singpost saw its turnover increase by 3.5% y-o-y to S$106.6m and underlying net profit by 4% y-o-y to S$31.3m. Including the exceptional income of S$4.8m from the sale of property, net profit jumped 20% y-o-y to S$36.1m. Underlying operating margins have improved significantly to 37.1% in 2Q07 from 35.4% in 2Q06 due to strong focus on managing operating costs. Robust cash flow from operations enabled the company to pre-pay S$20m out of S$60m term-loan and declare an interim dividend of 1.25 cents per share.

Growth Initiatives paying well. We expect Singpost to witness robust growth in the new business segments each successive year. Operating profit from retail segment grew 66% y-o-y to S$2.3m while profit from logistic segment grew 14% y-o-y to S$2.4m with both segments registering significant improvement in margins. In this quarter, Singpost entered into a new space of real-estate services by tying up with a property agency that should keep the momentum going on for the retail segment. With in the mail segment, public mail volume continued to decline that was more than offset by growth in direct mail and international mail volume.

Factored the impact of postal liberalization We maintain our earnings forecast for Singpost, with our base-case scenario of Singpost losing 15% market share (-S$30m in revenue) in Basic Mail Services (BMS) by 2011 as a result of postal liberalization. The basecase scenario assumes that new players would enter in the upstream activity of mail collection and target business customers in selected coverage area. Our best and worst-case scenarios assume Singpost losing 5% and 30%(-$60m in revenue) market share in BMS respectively. Our earlier report on Singpost dated 09-Oct, provides details of postal liberalization and its potential impact on Singpost. We expect a clear picture about liberalization to emerge in the beginning of 2007 when IDA is expected to issue licenses to different players.

Relevance: Reiterate our BUY recommendation for Singpost at 1-year DCF (WACC 6%, terminal growth rate 1%) derived target price of S$1.12 that translates to a dividend yield of 5.5%.

Technical Analysis

�� BUY on rising momentum – SingPost’s share price has reached close to its bottom with limited downside risk. We expect a target of S$1.11 and a holding period of 2-3 months with an entry range between S$0.985 –S$1.00.

�� Indicators signal a bottom reversal – The %D Stochastics reversed turning up from its over-sold region. Although the MACD shows a continual down trend, we believe that the bottom for Singapore is at around S$0.985. If the trend breaches below its support levels at S$0.975, we could see support at S$0.93, our previous downside target.



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SingPost - Lim and Tan


Extracts fm Lim and Tan report dated 1-Nov-06, 

More Patience Needed


  • Excluding the $4.8 mln profit from the sale of a non-core property, Sing Post’s profit for Q2 ended Sept ’06 rose 4% to $31.3 mln. All divisions contributed to this, with Retail Division registering the sharpest increase.
  • Quarterly dividend is maintained at 1.25 cents per share, yielding 5% net with the stock at $1.00. This is amply justified by the robust cash flow, of $74.6 mln in H1, up a solid 21% from $61.6 mln in the same period the year before.

COMMENTS



  1. The stock has been under some pressure since the IDA released the Consultation Paper on Further Liberalization of the Postal Services in August. SingPost’s exclusive license for basic mail services (letters and post cards) expires on March 31st ’07.
  2. This is unlikely to be lifted until

    • the deregulation issue; and
    • fate of Sing Tel’s remaining 26% stake, are out of the way. (Sing Post has submitted its feedback to the IDA, which, we expect, will make public its decision well before March 31 ’07.)

  3. We have expressed our “sanguine” views on the subject previously, and maintain the yield is attractive enough to continue to justify BUY.


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RE: Singpost


Extracted from CIMB

Target: S$1.21

• Operating performance in line with expectations. Excluding a one-off gain of
S$4.8m, 2Q07 core EPS of 1.6cts makes up 24% of our full-year forecast. An
interim DPS of 1.25cts has been declared for 2Q07, bringing 1H07 DPS to 2.5cts,
vs. our full-year forecast of 5.7cts and consensus forecast of 5.9cts.

• Retail business still powering the business. Revenue climbed 3.5% yoy to
S$106.6m in 2Q07, helped by 14% growth in retail revenue to S$14m. In
particular, financial services continued to do well, with revenue jumping 100% yoy
to S$3.6m. This was, however, negated by lower philatelic sales (one-off joint
stamp issue with Belgium in 2Q06) and warehousing/fulfilment/distribution revenue
(termination of contracts).

• Margins improved across the board. EBIT margins for all business segments
improved 50bp to 5.3% pts over the previous year, lifting the overall EBIT margin
by 1.7% pts to 37% in 2Q07. The 20% growth in group PATMI in 2Q07 was,
however, driven by an exceptional gain of S$4.8m from the divestment of the
Marine Parade Post Office property.

• FY07 forecast is raised to reflect exceptional gains. We are keeping our core
FY07 EPS forecast of 6.7cts unchanged but have raised our FY07 EPS forecast
by 3.5% to 6.9cts, in line with consensus, to account for one-off gains of S$5.3m.
• Maintain Outperform. We believe SingPost is on course to meet our forward
DPS targets and have maintained our DDM-based target price of S$1.21 (cost of
equity 5.9%). Concern over the impact of the impending liberalisation of basic mail
services appear to be overdone. As a recap, the liberalisation after March 07
would affect only the collection and delivery of letters and postcards within and out
of Singapore. At the current price, we estimate the market has factored in a
market-share loss of over 50% for SingPost by FY09 post-liberalisation, which we
believe is unlikely. Forward yields are decent at 4-5% and SingPost remains an
excellent defensive stock. Maintain Outperform.

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Interesting! Capital Grp sold down SingPost in B/Oct and now they buy back! Extracts fm SGX Announcement,

>> PART I
1. Date of notice to issuer * 31-10-2006    
2. Name of Substantial Shareholder * The Capital Group Companies, Inc.  

>> PART III
1. Date of change of Shareholding 30-10-2006  
2. The change in the percentage level From 10.8857 % To 11.1848 %
3. Circumstance(s) giving rise to the interest or change in interest : Shares were purchased through open market transactions at shareholder discretion   es
4. A statement of whether the change in the percentage level is the result of a transaction or a series of transactions: Shares were purchased through a series of transactions from 27 October 2006 thru 30 October 2006   

>> PART IV
No. of shares held before the change : 208,469,000  
As a percentage of issued share capital : 10.8857 %
No. of shares held after the change : 214,216,000  
As a percentage of issued share capital : 11.1848 %



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Extracts fm SGX Announcement dated 17-Nov-06,

Singapore Post Revises Postage Rates


  • domestic postage rate for 20g mail increases two cents after 11 years
  • international airmail postage rates increase between five and 40 cents
  • registration fee up by 20 cents


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Singpost - DBSVickers


Extracts fm DBSVickers Report dated 21-Nov-06,

Earnings growth from price hike

Postage hike in 20g weight-step for domestic and international mail. For ordinary domestic mail, the postage will increase by 2 cents to 25 cents in the 20g category. The postage rate for the rest of the category remains unchanged. In the international mail segment, postage increases vary from 5% to 15% in different zones with 20g weight step while postage has been increased in some zones across higher weight segments also. Registration fees for both domestic and international mail rates have also gone up by 10%.

Singpost to charge consumers more without much revenue leakage. As the postage increase is done for the 20g weight step, the impact would be felt by the public mail segment, which makes up about 12% of total business. Post liberalization in April 07, we believe that no player intends to enter the public mail segment due to e-substitution and high infrastructure costs. As such, Singpost does not face any risk of losing revenue to competitors. The other affected segment would be the international outbound mail segment, which makes up around 20% of total business. International outbound mail segment is part of the monopoly presently and should open to competition post-liberalization. However, we do not expect much leakage given that rates are quite competitive compared to developed countries.

FY08 EPS to increase by 4% to 7.6 cents from 7.3 cents. In our view, increase in resultant revenue should bottom down directly to earnings growth. The resultant postage increase translates to about 10% price hike in public mail and international outbound segment. We estimate net earnings to rise about S$3m for domestic mail and about S$2.5m for international outbound mail, adding S$5.5m in total to FY08's net earnings estimate of S$139.1. We have revised our DCF based target price to S$1.16 from S$1.12. Maintain BUY.



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Singpost - CIMB


Extracts fm CIMB report dated 21-Nov-06,

Rate hike to mitigate higher operating costs

First domestic postage rate revision after 11 years. From 18 Dec 2006, the postage rate for domestic mail up to 20g will increase 8.7% from 23cts to 25cts. Rates for other weight-steps remain unchanged.

International postage rate up as much as 57%. The rates for Zone 1 mail (Malaysia and Brunei) are revised upwards by 6.3-25% across the different weight-steps. For Zone 2 mail (Asia Pacific, excluding Japan, Australia and New Zealand) up to 20g, the new postage rate is now 8.3% higher at 65cts, while the rates for other weightsteps remain unchanged. The existing Zone 3 and Zone 4 will be combined to become a new Zone 3 (the rest of the world). The postage rate for the new Zone 3 mail up to 20g is S$1.10 and every additional 10g will be charged 35cts. Postage rates for domestic and international registered mails will also increase 10% to S$2.20 from S$2.00 currently.

Valuation and recommendation

Forecasts lifted to reflect revised rates. Domestic and international mail account for 60% and 33% respectively of SingPost’s mail revenue, which in turn constitutes 73% of the group’s total revenue. As the new postage rates will be effective from 18 Dec, we assume minimal impact on FY07 numbers but have raised our FY08 and FY09 EPS forecasts by 5-11% to reflect the new rates.

Maintain Outperform. As a result, our DDM-derived target price has been raised from S$1.21 to S$1.25, based on a) higher DPS forecasts (assuming payout ratio of 85%) and b) cost of equity of 6.5% (up from 5.9% to account for higher operating risks over the next few years). As a secondary valuation, our target price of S$1.25 translates into 18.1x CY07 P/E, which we believe is justified given SingPost’s high 80-90% payout ratio and above-average ROE in excess of 50%. We continue to believe the concerns over the impending deregulation of basic domestic mail services are overdone and see SingPost as an excellent defensive stock with decent forward yields of 4.7-5.4%. Maintain Outperform.



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Singpost


Channel NewsAsia, 22 November 2006 1938 hrs


Brokerages upgrade outlook for SingPost

Market analysts are starting to give SingPost a stamp of approval. After months of selling pressure on the counter, some are now calling it a hot stock to watch. The upgrades were quick to come after SingPost announced a rise in postage rates last week. Just a month ago, SingPost shares took a beating on news that it would lose its monopoly licence next March. But in the last few days, the counter has staged a sharp turnaround and is now trading at S$1.10, its highest level in three months.

Brokerages are revising their outlook, with UOB Kay Hian calling for a higher target price of $1.31. The positive sentiment was largely driven by its postal rate hikes for domestic and international mail. Analysts say this will help boost earnings.

Sachin Mittal, Analyst, DBS Vickers Securities, said: "I've increased from $1.12 to $1.16. The hike in the prices will translate to a 10 percent increase in the public mail segment and the international letters segment. This will approximately add about 5 to 6 million dollars to annual revenues next year. DBS Vickers upped its target price from S$1.12 to S$1.16, on the view that earnings per share will rise 4 percent to 7.6 cents. The bullish projection takes into account, the prospect of new competitors entering the field next March.

At an estimated worth of S$200 million, analysts believe that the basic mail services market is too small to attract large global players. But they say, small local players may be interested in the small margins offered by the corporate mail services sector.

Mr Mittal said: "They've been preparing for the opening of the sector. There will be some competition, there will be some market share in the basic mail segment, which new players will likely take away. But it won't be much. A maximum of 15 percent of the basic mail segment within 5 years, which means the process of market share loss will be very gradual, and very limited."

The positive outlook on SingPost is also supported by its efforts to diversify. SingPost has been active in this area - even diversifying into retail financial services, as a distributor of Prudential unit trusts and insurance policies. This sector now only accounts for less than 10 percent of revenue, but DBS Vickers sees it as the fastest-growing sector for SingPost, and expects 11 percent growth year-on-year for the next 5 years.

On Wednesday, SingPost shares rose 1.9 percent to S$1.10, with over 20 million shares changing hands.



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Extracted from Singpost 3Q Results release

o Q3 revenue grew 3.5%

o Net profit rose 4.0%

o Interim dividend of 1.25 cents

Singapore, 30 January 2007
– Singapore Post Limited ("SingPost") today

announced its unaudited results for the third quarter and nine months ended 31

December 2006.

Q3 revenue grew 3.5% to S$111.8M

The Group registered a 3.5% growth in its revenue for the third quarter, from

S$108.0 million to S$111.8 million, underpinned by improved contributions from all business segments.

Mail revenue for the quarter grew 3.5%, from S$83.1 million to S$86.0 million, as all business lines performed better. Logistics revenue rose 3.0% from S$16.4 million to S$16.9 million, due to higher contributions from
Speedpost. Retail revenue increased 12.2% from S$12.9 million to S$14.5 million, attributed to increased contributions from financial services, retail products and vPOST mail-order transactions.

Said Mr Lau Boon Tuan, Group CEO of SingPost: "In the third quarter, we further

leveraged our retail network for growth, collaborating with our business partners to offer more value-added services and products including
PostREALTY service and unit trusts. During the quarter, we further strengthened our distribution network with the addition of a new post office in Suntec City, bringing the total to 63, and rolling out more SAMPLUS to condominiums."

Added Mr Lau: "We also continued to explore opportunities for expansion in the

region, focusing on our core competencies. In this connection, we signed a

collaboration agreement with Pos Indonesia to explore working on four areas namely channeling services, remittances, logistics and direct mail."

Hybrid mail operations, under subsidiary DataPost, is 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 continued to increase on the back of an enlarged customer base as the online portal tapped into new regional markets such as Malaysia and Thailand.

During the third quarter, the Infocomm Development Authority (IDA) approved an increase in postage rates for domestic mail and international airmail effective 18 December 2006.

Net profit rose 4.0% to S$34.1M

With its focus on cost management and quality growth, operating profit margins for the Group in the third quarter remained firm.

Operating profit for the Group increased by 6.0% from S$40.8 million to S$43.3

million. Mail operating profit rose 3.4% from S$33.3 million to S$34.4 million while Logistics posted a 9.0% increase in operating profit from S$2.9 million to S$3.2 million. Retail operating profit grew 25.3% from S$2.2 million to S$2.7 million.

Finance expenses increased 24.8% from S$2.1 million to S$2.7 million due to higher borrowings and higher interest rates.

The Group achieved a growth of 4.0% in net profit for the third quarter, from S$32.8 million to S$34.1 million.

Poised to compete in a liberalised basic mail services market

With the impending expiry of its monopoly in the basic mail services market,

SingPost is confident that it is well-positioned to compete when the market is

liberalised.

The Group started preparing for the liberalisation upon its listing in 2003, by

enhancing its core business and leveraging its retail and distribution network for growth. These strategies which include growing the mail business and diversifying into financial services, have strengthened the Group and put it in good stead to compete in a deregulated market.

Said Mr Lau Boon Tuan: "We have been making good progress in our efforts to not only grow our core business and leverage our retail network, but also extend our core competencies and businesses into the region. We will continue to look for opportunities for expansion."

Cashflow and dividends

The Group’s cashflow generation remained robust. Net cash inflow from operating activities amounted to S$122.6 million in the nine months of FY2006/07 compared to S$104.6 million in the corresponding period last year.

SingPost’s Board of Directors has declared an interim dividend of 1.25 cents per

ordinary share, payable on 28 February 2007.


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%



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