UOB Kay Hian

Date of Report: Friday, 16 May 2025

Singapore Post (SPOST): Buy Recommendation Maintained Despite Underwhelming FY25 Results

SPOST Company Overview

Singapore Post (SPOST) is identified as the national postal service provider in Singapore. The company delivers domestic and international postal and courier services, including integrated mail solutions that encompass data printing [[1]].

Stock Data and Performance

• GICS sector: Industrials [[1]]
• Bloomberg ticker: SPOST SP [[1]]
• Shares issued: 2,251.3 million [[1]]
• Market cap (S\$m): 1,260.7 [[1]]
• Market cap (US\$m): 971.6 [[1]]
• 3-month average daily turnover (US\$m): 4.0 [[1]]
• 52-week high/low: S\$0.635/S\$0.405 [[1]]
• Price Performance (%):
  • 1 month: 8.7 [[1]]
  • 3 months: 1.8 [[1]]
  • 6 months: 6.7 [[1]]
  • 1 year: 14.3 [[1]]
  • Year-to-date: 4.7 [[1]]

Major Shareholders

• Singtel: 22.0% [[1]]
• Alibaba Group: 14.6% [[1]]

Key Financial Indicators

• FY26 NAV/Share (S\$): 0.50 [[1]]
• FY26 Net Debt/Share (S\$): 0.05 [[1]]

Investment Thesis

Despite underwhelming FY25 results, UOB Kay Hian maintains a BUY recommendation for Singapore Post (SPOST), supported by a special dividend declaration and strategic divestments. The target price is set at S\$0.66, reflecting an upside of +18.1% from the current share price of S\$0.56 [[1]].

FY25 Results Analysis

Singapore Post’s FY25 results showed a decline in revenue and underlying PATMI, primarily due to challenges in the international and Singapore postal businesses. However, this was partially offset by strong performances from Famous Holdings and the property segment [[1]].

• Revenue: S\$813.7 million (-7.5% yoy) [[1]]
• Underlying PATMI: -40.3% yoy [[1]]

Excluding a S\$222.2m net exceptional gain from the sale of its Australia business [[1]], SPOST posted lower FY25 revenue (-7.5% yoy) and underlying PATMI (-40.3% yoy), dragged by the international and Singapore postal business but offset by Famous Holdings and the property segment [[1]].

Segmental Performance

• Australia: Revenue of S\$12.5 million (-43.7% yoy) [[1]]
• International: Revenue of S\$494.3 million (-11.2% yoy) [[1]]
  • International business: S\$202.8 million (-32.5% yoy) [[1]]
  • Freight forwarding: S\$296.4 million (+12.7% yoy) [[1]]
• Singapore: Revenue of S\$326.7 million (+2.9% yoy) [[1]]
  • Singapore business: S\$259.3 million (+0.2% yoy) [[1]]
  • Property: S\$86.9 million (+11.9% yoy) [[1]]

Operating Profit

• Operating Profit: S\$44.3 million (+30.8%) [[1]]
  • Australia: (S\$1.8 million) [[1]]
  • International: S\$19.3 million (-17.6%) [[1]]
  • Singapore: S\$54.9 million (+24.4%) [[1]]

Key Highlights

• Special Dividend: A special dividend of 9 S cents/share was declared, implying a 16% dividend yield, utilizing cash proceeds from the Australia business sale [[2]].
• Challenges: The Singapore postal segment faced weak volumes, while the international segment was impacted by macroeconomic uncertainty [[2]].
• Offsetting Factors: Strong performances from the property and freight forwarding segments partially mitigated the declines [[2]].

Key Financials and Forecasts

UOB Kay Hian provides the following financial forecasts for Singapore Post [[3]]:

Stock Impact Analysis

Singapore (Postal)

The Singapore postal segment underperformed, with a revenue decrease of -9.6% yoy in 2HFY25, driven by lower ecommerce revenue (-14.9% yoy) and higher operating costs. The postal office network remains unprofitable (FY25: S\$14.4m operating loss) [[2]]. Management is in discussions with regulatory authorities to ensure the long-term commercial viability of postal services, potentially leading to rationalization of the postal office network, government subsidies, or postal rate hikes [[2]].

Singapore (Property)

The property segment showed strong performance, with operating profit growing 17.8% yoy in 2HFY25 to S\$24.5m, supported by improved rental income. Occupancy rates at SingPost Centre remained stable at 98.2% at the end of 4QFY25 [[2]].

International (Postal)

The international postal segment faced headwinds, with a sharp revenue decrease of -39.2% yoy in 2HFY25 due to trade uncertainty and disruptions caused by US tariffs. The operating loss widened to S\$5.3m. Management expects challenging conditions to persist into FY26. This segment is set to merge with the Singapore postal segment to improve cost efficiency [[2]].

International (Famous Holdings)

Famous Holdings outperformed, with revenue growing 15.8% yoy and operating profit surging 31.0% yoy in 2HFY25, driven by higher sea freight rates. As a non-core asset, Famous Holdings may be divested to unlock shareholder value, valued at S\$180m-215m based on an estimated EBITDA of S\$30m-35m and a 6x multiple [[2]].

Australia

Following the sale of the Australia business, the segment now only includes QS Australia. Approximately half of the S\$683m cash proceeds were used to pay off the group’s Australian dollar-denominated debt of S\$321m. This resulted in annual interest cost savings of S\$16m starting FY26, expanding PATMI margins. The group had a net cash position of S\$347m as of end-FY25 [[2]].

Earnings Revision and Recommendation

• Earnings Revision: FY26-27 core PATMI estimates are restated, with FY28 forecast added. FY26-28 core PATMI is now forecast at S\$34.9m, S\$37.7m, and S\$41.4m, respectively [[3]].
• Recommendation: Maintain BUY with a lower SOTP-based target price of S\$0.66 (previously S\$0.72), rolling over the valuation to FY26 [[3]].

SOTP Valuation

Based on the SOTP valuation, the postal, Famous Holdings, and property segments are valued at S\$150.8m, S\$188.2m, and S\$1,020.0m, respectively [[3]].

SOTP Valuation Table [[3]]:

Share Price Catalysts

• Divestment of non-core businesses [[3]].
• Additional special dividends [[3]].

Financial Projections

The following table summarizes the profit and loss balance sheet projections [[4]]:

Balance Sheet Summary

Cash Flow Analysis

Key Metrics and Ratios