Broker: OCBC Investment Research
Date of Report: 1 August 2025

Singapore Post: Unlocking Value Through Strategic Asset Monetisation and Divestments

Overview: Singapore Post’s Strategic Transformation Amid Industry Headwinds

Singapore Post (SPOST), a key player in Singapore’s postal and e-commerce logistics sector, is undergoing a significant transformation. With the digital age accelerating the global decline in letter mail volumes, SPOST faces mounting challenges from its national duty to deliver quality postal services and the rising costs of maintaining its domestic network. In response, the company is actively shifting towards becoming a global logistics powerhouse, while strategically monetising non-core assets to unlock shareholder value.

Key Report Highlights

• BUY rating upgraded on valuation grounds, with a revised fair value of SGD 0.590 per share.
• Recent divestments include the sale of the freight forwarding business for SGD 177.9 million, netting a gain of SGD 10.5 million and unlocking approximately SGD 104 million in cash.
• Additional asset monetisation expected through a SGD 50 million sale-and-leaseback of 10 post office properties in HDB shophouses.
• Despite a stronger balance sheet post-divestments, caution is urged due to ongoing structural challenges and lack of clarity on future growth plans.

Investment Thesis: Navigating a Changing Postal Landscape

SPOST’s legacy core—the domestic postal business—continues to face structural headwinds, with declining mail volumes exacerbated by the rise of digital communication. The company is currently engaged in discussions with the Infocomm Media Development Authority (IMDA) to secure the sustainability of its postal network. With the recent divestment of its Australia business for AUD 1.02 billion, SPOST’s operations have been significantly scaled down. Investors now await clear direction on the next phase of growth, supported by a healthier balance sheet and greater financial flexibility.

Recent Divestments and Cash Unlocks

On 22 July 2025, SPOST announced the sale of its entire freight forwarding business—including Famous Holdings and Rotterdam Harbour—for SGD 177.9 million. This business had previously been earmarked as non-core in a strategic review. The divestment, finalised on 23 July 2025, resulted in a realised gain of SGD 10.5 million and unlocked approximately SGD 104 million in cash, now available for future deployment as needed.
On a pro forma basis, FY25 earnings per share (EPS) would have nudged up from 10.9 to 11.1 Singapore cents had the deal closed on 1 April 2024.

Valuation Update and SOTP Analysis

OCBC has updated its fair value estimate for SPOST to SGD 0.590 per share (down from SGD 0.605), adjusting for the recent divestment and including the estimated value of the post office network. The target FY26 EV/EBITDA multiple is lowered from 7.7x to 6.0x, reflecting a more conservative outlook. As SPOST’s share price has pulled back after going ex-dividend on 30 July, the stock is upgraded to BUY on valuation grounds.
However, investors are cautioned as the company’s value is now concentrated mainly in its property and non-core assets, while the domestic postal business remains in structural decline and international operations face a subdued environment. Additionally, SPOST is in the midst of board and management changes, with no detailed strategic growth plan yet disclosed.

Sum-of-the-Parts (SOTP) Valuation Breakdown

Financial Performance and Key Ratios

Key Ratios:

• Dividend Yield (%): 19.1 (FY25); 0.6 (FY26E); 0.9 (FY27E)
• ROE (%): 18.6 (FY25); 1.7 (FY26E); 1.1 (FY27E)

Peer Comparison: Valuations Across Regional and Global Mail & Logistics Players

ESG Leadership and Sustainability Initiatives

SPOST maintains a leading ESG rating among global peers, excelling in corporate governance with a majority-independent board and fully independent audit and risk committees. Labour management practices are on par with industry leaders. Environmental initiatives include significant progress in carbon mitigation, such as electrifying Singapore’s delivery fleet.

Potential Catalysts for SPOST

• Accretive acquisitions in the region at attractive valuation multiples.
• Achieving a structural solution to ensure long-term commercial sustainability of the domestic postal business.
• Potential injection of property assets, such as SingPost Centre, into a REIT structure.

Investment Risks to Monitor

• Increasing competition in logistics and mail segments.
• Risks in acquisition and integration, with potential execution hiccups.
• Slowdown in regional e-commerce demand.

Company Overview and Revenue Breakdown

Founded in 1858, SPOST has evolved into a leader in postal and e-commerce logistics across Asia Pacific, serving over 220 destinations globally and employing approximately 3,000 staff in 14 markets. Its business portfolio spans national and international postal services, warehouse and fulfilment, freight forwarding, last-mile delivery, and property leasing (mainly SingPost Centre in Singapore).
FY25 Revenue Segmentation:

• By segment: Singapore (40.1%), International (60.7%), Australia (1.5%), Eliminations (-2.4%)
• By geography: Singapore (61%), Australia (6%), Other countries (33%)

Historical Financial Performance

Profitability and Credit Ratios

• Return on Equity (FY25): 14.86%
• Return on Assets (FY25): 8.33%
• Operating Margin (FY25): 31.56%
• Pretax Margin (FY25): 30.28%
• Net Income Margin (FY25): 26.97%
• Effective Tax Rate (FY25): 6.54%
• Dividend Payout Ratio (FY25): 3.27%
• Total Debt/EBIT (FY25): 8.35
• Net Debt/EBIT (FY25): -9.51
• EBIT to Interest Expense (FY25): 1.75
• Long-Term Debt/Total Assets (FY25): 15.19%
• Net Debt/Equity (FY25): -0.24

Conclusion: Value Realisation Amid Transition

Singapore Post stands at a crossroads, leveraging asset sales and a robust property portfolio to unlock value while battling structural decline in its core postal business. With a strengthened balance sheet and potential for accretive regional acquisitions, SPOST offers valuation upside but also carries execution and strategic clarity risks. The company’s next phase will hinge on its ability to identify new growth engines and maintain commercial sustainability amidst a rapidly evolving logistics landscape.