21 May 2014

SingPost Full Year 2013 Summary - May 2014

  • The group recorded growth in both revenue and net profit thanks to the growth in logistic division and retail & eCommerce division
  • Domestic mail volumes continued to decline for second consecutive year, compounded by escalating labour costs
  • Increasing cost pressures especially in Singapore, together with continued investment in service quality and productivity in Singapore
  • Continued investment in service quality and productivity in Singapore
    • Committed to obligations as Public Postal Licensee (PPL)
    • Investing S$100 million to drive innovation, productivity and customer service to bring greater value to customers
    • Investment include advanced mail sorting equipment, an intelligent alternative delivery
    • network (POPStations) and a higher capacity three-wheeler fleet which is also safer for the postmen
  • Good progress in transformation programme
    • Further progress on end-to-end e-commerce logistics capabilities and network in Asian markets, with over 600 e-commerce customers
    • Integration of new M&As progressing
    • Increased revenue contributions from regional markets
  • The group now focus on growing logistic & eCommerce business, while reducing reliance on domestic mailing services (dropped to 55.5% of overall revenue from 62.9% corresponding period)
  • Oversea revenue also made up about 28% of total revenue compared to 19% a year ago 
  • Group proposed final dividend of 2.5 cents. Full year dividend of 6.25 cents matched previous year dps and it is translated to 4.17% dividend yield based on current market price. I think the long term grow rate is at the low single digit level, and hence 22X trailing PE seems unattractive to me. We will wait and see whether the group could transform to diversified group with better operating efficiency & profit margin and hence the high PE can be justified. 
  • This counter is good for those investors who prefer for a stable dividend income for long period as I believe the group can still enjoy a good free cash flow for coming years ahead. 

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