Maybank Research Pte Ltd May 6, 2025
SingPost: Special Dividends and Asset Sales on the Horizon
Overview: Special Dividends Incoming
Singapore Post (SPOST SP) is poised to announce its FY25E results on May 15th. Anticipation is high for special dividends, a move expected to reward shareholders and return cash following significant corporate actions. The recent sale of its Australian business and the unwinding of QSI minority cross-shareholdings are set to inject a further SGD55.9m in cash. Analysts project special dividends of at least SGD0.10 per share. Furthermore, with the recent election concluded, the company is expected to accelerate additional asset sales, including post offices and SingPost Centre, alongside the ongoing divestment of its freight-forwarding business.
Accelerated Asset Divestment Post-Election
The conclusion of the election is expected to pave the way for SingPost to expedite the rationalisation of its postal network branches. This strategic move aims to reduce costs and is likely to involve the sale of some associated properties. SingPost Centre, a key asset, has also been earmarked for sale to unlock shareholder value. Adding to the potential divestment proceeds is the freight-forwarding business, which is currently in the process of being sold.
Forging a New Business Model for Mail
Within the mail business, the existing postal network presents a challenge. It is expensive to maintain yet serves only 20% of the total mail volume. The increasing digitalisation of services has rendered traditional post offices less relevant and financially unsustainable. SingPost is actively engaged in discussions with the government to develop a new business model to address these issues. With new directors joining the board, the company is also in the process of searching for a new Group CEO, particularly if a decision is made to invest in a new business direction. As of now, the process is ongoing, and neither a Group CEO nor a specific new business model has been identified.
FY25 Expectations and Value Drivers
The upcoming FY25 results are anticipated to be weak, primarily due to challenges in the international business segment and the high costs associated with the local postal network amidst declining demand. However, the report emphasizes that the primary focus for investors should be on asset monetisation and potential dividends rather than near-term earnings performance. The value proposition is seen largely in the company’s underlying assets and the cash flow generated from their divestment.
Company Description and Statistics
Singapore Post is a leading postal and eCommerce logistics provider operating across the Asia Pacific region.
Statistics:
- Share Price: SGD 0.60 (as of May 6, 2025)
- 12m Price Target: SGD 0.77 (+28%)
- Previous Price Target: SGD 0.77
- Recommendation: BUY
- 52w high/low (SGD): 0.62/0.42
- 3m avg turnover (USDm): 3.2
- Free float (%): 60.7
- Issued shares (m): 2,250
- Market capitalisation: SGD1.3B / USD1.0B
- Major shareholders: Singapore Telecommunications Ltd. (21.7%), Alibaba Group Holding Ltd. (14.4%), The Vanguard Group, Inc. (2.3%)
Value Proposition
- SingPost is identified as the 4th-largest logistics player in Australia (prior to divestment).
- The company is considered significantly undervalued with net assets estimated at SGD0.90/share.
- Profitability and dividends are projected to surge in the coming years.
- Asset monetisation is expected to return significant value to shareholders.
- The company is positioned to benefit from higher e-commerce volumes.
Price Drivers and Historical Trends
Key factors influencing SingPost’s share price historically include:
- The impact of Covid-19 lockdowns on international freight and logistics.
- Results that have occasionally missed market expectations.
- Alibaba’s sale of SingPost shares at SGD0.46 each.
- News flow surrounding bidders for its Australian business.
- 1H24 results being below expectations partly due to higher financing costs.
Financial Metrics and Outlook
Analysts anticipate dividends and profit to increase over the next few years. Debt is expected to be gradually reduced, particularly through asset sales, which should also lead to a decrease in interest expenses over time. Operating cash flow is projected to remain robust.
Swing Factors
Upside Potential:
- Successful asset monetisation that unlocks value.
- Improvement in financial performance, especially in FY25E.
- Dividends increasing in line with performance and asset sales.
- A turnaround and strong performance in the core Singapore postal business.
Downside Risks:
- Lower consumer spending impacting logistics and postal volumes.
- High annual interest expense, estimated at about SGD49m.
- Asset sales potentially being concluded at valuations lower than expected.
ESG Analysis
SingPost faces several ESG-related risks, including potential stranded assets, increased financing costs for non-sustainable projects, and stringent regulatory requirements. To mitigate these, the company is enhancing sustainability practices, investing in green technologies, and strengthening internal controls. They leverage frameworks like the Singapore Green Bond and the ESG Registry (under Project Greenprint) and engage stakeholders and employees.
According to Sustainalytics, SingPost has an ESG score of 16.4, ranking 47th out of 407 transportation companies. This indicates effective management of ESG risks relative to peers. Proactive adoption of frameworks and transparency efforts help align SingPost with global sustainability trends.
SingPost’s commitment to sustainability is demonstrated by adopting the Singapore Green Bond Framework, using the ESG registry, recycling initiatives, and advocating for diversity. Further investment in green technologies, such as increasing the EV fleet (currently 37%), and greater community engagement could enhance its reputation.
Material E (Environmental) Issues
- SingPost aims for net-zero carbon emissions by 2030 in Singapore and 2050 globally.
- Initiatives include electrifying the Singapore delivery fleet, installing solar panels (powering 3.7% of SingPost Centre’s annual needs), and implementing efficient cooling systems.
- These efforts resulted in reduced electricity use (135,000 GJ to 133,000 GJ) and scope 1 emissions (33,861 tCO2e to 29,267 tCO2e) between 2022 and 2023.
- Logistics operations contribute significantly to emissions (29,237 tCO2e Scope 1, 15,933 tCO2e Scope 2 in 2023).
- Sustainable packaging like recycled SmartPac and recyclable/reusable options have been introduced.
- Climate risk assessments are conducted to mitigate key market risks.
Material G (Governance) Issues
- A past incident in 2021 involved a former senior vice president charged with fraudulent salary claims and seeking bribes.
- SingPost has responded by strengthening internal controls and due diligence, increasing employee credential verification, and boosting the frequency of audits and process reviews to identify vulnerabilities.
Material S (Social) Issues
- Social responsibility efforts build trust and reputation.
- Support for worker health includes screenings and trade union consultations.
- Gender diversity is promoted with a 30% female workforce benchmark (49.1% achieved in 2023).
- Community initiatives include volunteering and supporting inclusivity for persons with disabilities through stamp launches.
- A diversity imbalance exists in senior management (36% female in FY23/24).
- A Diversity and Inclusivity policy and signing the Employers’ Pledge of Fair Employment Practices have been introduced to address this.
Quantitative ESG Parameters
Score: 28
| Particulars |
Unit |
2021/22 |
2022/23 |
2023/24 |
SATS 2023 |
| E |
| Scope 1 emissions |
tCO2e/million hour |
3,922 |
33,681 |
29,267 |
22,585 |
| Scope 2 emissions |
tCO2e/million hour |
16,226 |
17,187 |
15,933 |
156,866 |
| Total |
tCO2e |
20,148 |
50,868 |
45,200 |
179,451 |
| Scope 3 emissions (operational) |
tCO2e |
NA |
NA |
427,484 |
NA |
| Total |
tCO2e |
20,148 |
50,868 |
45,200 |
179,451 |
| GHG intensity (Scope 1 and 2) |
tCO2e/million hour |
NA |
50868.00 |
45200.00 |
8.700 |
| Direct Energy consumption |
GJ/million h |
NA |
479,400 |
417,300 |
7,355.60 |
| Indirect Energy consumption |
GJ/million h |
NA |
135,000 |
133,000 |
NA |
| Total Diesel consumption |
litres |
15,497 |
10,234 |
8,772 |
NA |
| S |
| % of women in senior management |
% |
36.0% |
37.0% |
36.0% |
26.0% |
| cases of corruption |
days |
0 |
0 |
0 |
0 |
| Total training hours |
Hours |
35,286 |
40,506 |
46,573 |
1,033,283 |
| Accident frequency rate |
% |
2.27 |
1.61 |
1.72 |
1.18 |
| Accident severity rate |
% |
1.13 |
0.8 |
0.86 |
0.59 |
| G |
| MD/CEO salary as % of reported net profit |
% |
1.54% |
0.97% |
2.19% |
1.44% |
| Board salary as % of reported net profit |
% |
NA |
NA |
NA |
NA |
| Independent directors on the Board |
% |
56% |
56% |
67% |
93% |
| Female directors on the Board |
% |
56% |
56% |
56% |
43% |
Qualitative ESG Parameters
Score: 83
- ESG policy in place, part of Risk committee: Yes.
- Senior management salary linked to ESG targets: No.
- Follows TCFD framework for ESG reporting: Yes.
- Mechanism to capture Scope 3 emissions: Yes. Parameters include all indirect emissions from upstream and downstream value chain activities, from purchased goods/services to end-of-life treatment of products.
- Key carbon mitigation/water/waste management strategies: Progressive replacement of delivery fleet with EVs; exploring renewable energy like solar PV systems (powering 19% of Regional eCommerce Logistics Hub’s total energy need); promoting circular economy by minimizing waste, optimizing packaging, exploring eco-friendly alternatives; hazardous waste collected, treated, decontaminated, and safely disposed by licensed contractor.
- Carbon offset part of net zero/carbon neutrality target: Yes.
ESG Targets
Score: 67
| Particulars |
Target |
Achieved |
| Aim to reduce carbon footprint |
1 |
1 |
| Zero confirmed incidents of corruption |
0 |
0 |
| Zero cases of non-compliance with all applicable laws and regulations |
0 |
0 |
| Carbon neutrality/net zero |
0% |
nil |
Overall ESG Score
SingPost has an established ESG framework, policies, and tangible mid/long-term targets. While E, G, and S metrics show positive year-on-year trends, the “E” metric could see further improvement. With an overall ESG score of 51, SingPost’s ESG rating is considered above average (average ESG rating = 50).
| ESG score |
Weights |
Scores |
Final Score |
| Quantitative |
50% |
28 |
14 |
| Qualitative |
25% |
83 |
21 |
| Target |
25% |
67 |
17 |
| Total |
|
|
51 |
Financial Projections (SGD m)
| FYE 31 Mar |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Key Metrics |
| P/E (reported) (x) |
53.6 |
13.4 |
29.6 |
27.6 |
25.7 |
| Core P/E (x) |
45.6 |
22.8 |
29.6 |
27.6 |
25.7 |
| P/BV (x) |
1.0 |
0.8 |
1.2 |
1.2 |
1.2 |
| P/NTA (x) |
1.3 |
1.2 |
1.8 |
1.8 |
1.8 |
| Net dividend yield (%) |
1.2 |
1.8 |
1.6 |
1.7 |
1.8 |
| FCF yield (%) |
7.8 |
4.0 |
nm |
3.0 |
2.8 |
| EV/EBITDA (x) |
7.1 |
8.0 |
8.3 |
7.9 |
7.4 |
| EV/EBIT (x) |
13.4 |
15.7 |
15.5 |
14.7 |
13.9 |
| INCOME STATEMENT (SGD m) |
| Revenue |
1,872.3 |
1,686.7 |
1,958.3 |
2,063.7 |
2,175.9 |
| EBITDA |
175.7 |
166.0 |
201.5 |
211.4 |
221.8 |
| Depreciation |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Amortisation |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| EBIT |
93.2 |
84.9 |
108.1 |
112.8 |
117.9 |
| Net interest income /(exp) |
(17.5) |
(20.3) |
(41.6) |
(41.6) |
(41.6) |
| Associates & JV |
0.0 |
(1.5) |
(1.5) |
(1.5) |
(1.5) |
| Exceptionals |
(7.7) |
36.8 |
0.0 |
0.0 |
0.0 |
| Other pretax income |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Pretax profit |
68.0 |
99.9 |
64.9 |
69.7 |
74.7 |
| Income tax |
(29.2) |
(18.4) |
(17.5) |
(18.8) |
(20.2) |
| Minorities |
(14.1) |
(3.1) |
(1.8) |
(2.0) |
(2.1) |
| Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Reported net profit |
24.7 |
78.3 |
45.5 |
48.9 |
52.4 |
| Core net profit |
24.7 |
41.5 |
45.5 |
48.9 |
52.4 |
| Preferred Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
na |
| BALANCE SHEET (SGD m) |
| Cash & Short Term Investments |
495.7 |
476.7 |
498.5 |
519.0 |
536.7 |
| Accounts receivable |
229.8 |
252.4 |
293.1 |
308.8 |
325.6 |
| Inventory |
0.5 |
0.3 |
0.3 |
0.3 |
0.3 |
| Reinsurance assets |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Property, Plant & Equip (net) |
386.9 |
454.3 |
424.4 |
399.8 |
379.5 |
| Intangible assets |
501.0 |
636.3 |
636.3 |
636.3 |
636.3 |
| Investment in Associates & JVs |
31.9 |
23.1 |
23.1 |
23.1 |
23.1 |
| Other assets |
1,191.9 |
1,292.8 |
1,292.8 |
1,294.7 |
1,294.6 |
| Total assets |
2,837.8 |
3,135.9 |
3,168.4 |
3,182.0 |
3,196.2 |
| ST interest bearing debt |
1.4 |
10.3 |
10.3 |
10.3 |
10.3 |
| Accounts payable |
632.5 |
605.6 |
698.4 |
736.4 |
776.8 |
| Insurance contract liabilities |
30.0 |
28.2 |
28.2 |
28.2 |
28.2 |
| LT interest bearing debt |
623.0 |
816.8 |
816.8 |
816.8 |
816.8 |
| Other liabilities |
177.0 |
254.0 |
231.0 |
207.0 |
181.0 |
| Total Liabilities |
1,463.5 |
1,715.0 |
1,785.0 |
1,798.5 |
1,812.7 |
| Shareholders Equity |
1,130.2 |
1,131.9 |
1,131.9 |
1,131.9 |
1,131.9 |
| Minority Interest |
(7.4) |
37.5 |
(0.0) |
(0.0) |
(0.0) |
| Total shareholder equity |
1,122.8 |
1,169.4 |
1,131.9 |
1,131.9 |
1,131.9 |
| Perpetual securities |
251.5 |
251.5 |
251.5 |
251.5 |
251.5 |
| Total liabilities and equity |
2,837.8 |
3,135.9 |
3,168.4 |
3,182.0 |
3,196.2 |
| CASH FLOW (SGD m) |
| Pretax profit |
68.0 |
99.9 |
64.9 |
69.7 |
74.7 |
| Depreciation & amortisation |
(82.6) |
(81.0) |
(93.5) |
(98.5) |
(104.0) |
| Adj net interest (income)/exp |
12.1 |
18.9 |
0.0 |
0.0 |
0.0 |
| Change in working capital |
(8.2) |
(34.9) |
(133.4) |
(53.8) |
(57.2) |
| Cash taxes paid |
(32.8) |
(31.0) |
(17.5) |
(18.8) |
(20.2) |
| Other operating cash flow |
31.9 |
(17.9) |
17.5 |
18.8 |
20.2 |
| Cash flow from operations |
115.7 |
93.4 |
11.3 |
90.5 |
87.8 |
| Capex |
(28.4) |
(55.2) |
(50.0) |
(50.0) |
(50.0) |
| Free cash flow |
87.2 |
38.2 |
(38.7) |
40.5 |
37.8 |
| Dividends paid |
(43.3) |
(18.5) |
(22.8) |
(24.4) |
(26.2) |
| Equity raised / (purchased) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Perpetual securities |
249.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Change in Debt |
128.8 |
193.0 |
0.0 |
0.0 |
0.0 |
| Perpetual securities distribution |
(8.2) |
(10.9) |
0.0 |
0.0 |
0.0 |
| Other invest/financing cash flow |
(198.3) |
(220.8) |
38.4 |
(33.6) |
(29.8) |
| Effect of exch rate changes |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Net cash flow |
215.3 |
(19.0) |
(23.0) |
(17.5) |
(18.2) |
Key Financial Ratios
| FYE 31 Mar |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Growth ratios (%) |
| Revenue growth |
12.4 |
(9.9) |
16.1 |
5.4 |
5.4 |
| EBITDA growth |
(5.8) |
(5.6) |
21.4 |
4.9 |
5.0 |
| EBIT growth |
(16.9) |
(8.8) |
27.3 |
4.4 |
4.5 |
| Pretax growth |
(36.7) |
46.9 |
(35.0) |
7.3 |
7.3 |
| Reported net profit growth |
(70.3) |
217.4 |
(41.9) |
7.3 |
7.3 |
| Core net profit growth |
(70.3) |
68.2 |
9.8 |
7.3 |
7.3 |
| Profitability ratios (%) |
| EBITDA margin |
9.4 |
9.8 |
10.3 |
10.2 |
10.2 |
| EBIT margin |
5.0 |
5.0 |
5.5 |
5.5 |
5.4 |
| Pretax profit margin |
3.6 |
5.9 |
3.3 |
3.4 |
3.4 |
| Payout ratio |
52.9 |
21.3 |
46.8 |
46.8 |
46.8 |
| DuPont analysis |
| Net profit margin (%) |
1.3 |
4.6 |
2.3 |
2.4 |
2.4 |
| Revenue/Assets (x) |
0.7 |
0.5 |
0.6 |
0.6 |
0.7 |
| Assets/Equity (x) |
2.5 |
2.8 |
2.8 |
2.8 |
2.8 |
| ROAE (%) |
2.0 |
6.9 |
4.0 |
4.3 |
na |
| ROAA (%) |
0.9 |
1.4 |
1.4 |
1.5 |
1.6 |
| Liquidity & Efficiency |
| Cash conversion cycle |
nm |
nm |
nm |
nm |
nm |
| Days receivable outstanding |
44.6 |
51.5 |
50.1 |
52.5 |
52.5 |
| Days inventory outstanding |
nm |
nm |
nm |
nm |
nm |
| Days payables outstanding |
nm |
nm |
nm |
nm |
nm |
| Dividend cover (x) |
1.9 |
4.7 |
2.1 |
2.1 |
2.1 |
| Current ratio (x) |
1.1 |
1.1 |
1.0 |
1.0 |
1.0 |
| Leverage & Expense Analysis |
| Asset/Liability (x) |
1.9 |
1.8 |
1.8 |
1.8 |
1.8 |
| Net gearing (%) (incl perps) |
9.4 |
24.7 |
23.8 |
22.3 |
21.0 |
| Net gearing (%) (excl. perps) |
11.5 |
30.0 |
29.0 |
27.2 |
25.7 |
| Net interest cover (x) |
5.3 |
4.2 |
2.6 |
2.7 |
2.8 |
| Debt/EBITDA (x) |
3.6 |
5.0 |
4.1 |
3.9 |
3.7 |
| Capex/revenue (%) |
1.5 |
3.3 |
2.6 |
2.4 |
2.3 |
| Net debt/ (net cash) |
128.7 |
350.4 |
328.7 |
308.1 |
290.4 |
Historical Recommendations and Target Price
Maybank IBG Research employs a rating system based on expected total return (including dividends) over the next 12 months:
- BUY: Return expected to be above 10%.
- HOLD: Return expected to be between 0% to 10%.
- SELL: Return expected to be below 0%.
Ratings are applied to stocks within the research coverage universe. Reports on companies outside this universe do not carry investment ratings.
Historical ratings for Singapore Post Ltd (SPOST SP) include:
- May 5 (previous year): Buy with a target price of SGD1.5
- November 25 (previous year): Buy with a target price of SGD0.7
- December 3 (previous year): Buy with a target price of SGD0.8
The current recommendation is BUY with a target price of SGD0.77.
