Hidden Value In SingPost: Significant Upside Potential
Maybank Research Pte Ltd | March 17, 2025
Singapore Post Ltd (SPOST SP): Maintain BUY with unchanged TP of SGD0.77
Unlocking Value Through Asset Monetization
SingPost shareholders have approved the sale of Freight Management Holdings (FMH) to Australia’s Pacific Equity Partners for SGD867m in enterprise value, with all conditions met. The company expects this deal to be completed by the end of March. Additionally, the sale of Famous Holdings could also be sealed, with special dividends declared ahead of SingPost’s full-year results in May. SingPost plans to invest SGD30m to boost capacity at its Tampines logistics hub and move all operations there from Singpost Centre (SPC), which is also up for sale or lease. The focus on asset monetization and returning value to shareholders remains the way forward for the company.
Significant Potential from Freeing Up SPC
Management expects the eCommerce logistics hub in Tampines to consolidate all its operations under one roof, improving efficiency. By mid-2026, this will free up about 83,000 sq ft of industrial space at SPC, opening up more leasing opportunities. If all operations are shifted there, over 376,000 sq ft of industrial space could be freed up, representing an estimated SGD9m leasing opportunity annually based on SGD2/psf. SingPost could also potentially apply for a conversion of land use from industrial to office/retail, which would significantly lift SPC’s valuation, subject to regulatory approvals. Currently, out of SPC’s 1.47m sq ft of GFA, 37% is classified as industrial, 45% as office, and the rest as retail.
Evolving Business Model for the Postal Network
Within its mail business, the postal network is expensive to maintain but serves only 20% of total mail volume. With growing digitalization of its services, post offices have become less relevant and financially unsustainable. SingPost is in discussions with the government to come up with a new business model to address this issue.
Asset Monetization Remains the Key
While SingPost’s international and Singapore businesses will continue to face challenges, the key focus remains the asset monetization angle, with potential for special dividends. The company’s net assets are estimated to be worth SGD0.90 per share, significantly undervaluing the current stock price.
Recommendation: Maintain BUY with TP of SGD0.77
The analyst maintains a BUY recommendation on SingPost with an unchanged target price of SGD0.77, implying a 39% upside potential. The potential for asset monetization and special dividends, along with an improvement in the company’s financial performance, especially in FY25, are the key catalysts for the stock.
