Overview
Singapore Post (SPOST) is a key player in the postal and e-commerce logistics sector, not only in Singapore but also with a significant presence in Australia. Despite the challenges posed by the global decline in letter mail volumes due to digitalisation, SPOST remains committed to providing quality postal services while managing rising costs. The company is actively transforming itself into a global logistics enterprise, leveraging e-commerce growth opportunities.
1HFY25 Financial Performance
In the first half of the financial year 2025 (1HFY25), SPOST saw a 20% year-on-year (YoY) increase in revenue, reaching SGD992.4 million. However, the net profit fell short of expectations due to higher-than-expected finance expenses. Operating expenses rose by 18.3% to SGD943.4 million, leading to a 62.9% increase in operating profit to SGD51.2 million. Net profit grew by 65.5% YoY to SGD22.2 million, which constituted 32% of our initial full-year forecast.
Strategic Review and Outlook
SPOST is undergoing a strategic review of its Australian business, with the outcome expected by the end of 2024. This review aims to provide clarity on the company’s strategic direction and growth drivers. SPOST is also in discussions with the Infocomm Media Development Authority (IMDA) to ensure the long-term sustainability of its postal network. The company declared an interim dividend of 0.34 Singapore cents per share, an 89% YoY increase.
Segment Performance
Australia Business
The Australian segment showed resilience, with 1HFY25 revenue and operating profit growing by 44.1% and 30.2% YoY to SGD574.9 million and SGD30.4 million, respectively. This growth was mainly driven by the consolidation of Border Express following its acquisition in March 2024.
International Segment
The International segment had mixed results. Freight forwarding revenue grew by 9.7% YoY to SGD148.7 million on higher sea freight rates, but operating profit declined by 29.2% to SGD8.4 million due to higher conveyance costs. Conversely, the International cross-border business saw a 26.8% slump in revenue to SGD161.1 million, but operating profit increased by SGD1.3 million to SGD4.3 million due to improved operational efficiency.
Singapore Business
In Singapore, the postal and logistics business recorded a 12.4% YoY growth in revenue to SGD129.6 million, driven by higher postage rates partially offset by a decline in letter mail volumes. However, after accounting for one-off costs related to technology investments and system upgrades, the segment made an operating loss of SGD0.9 million. Property revenue and operating profit grew by 13.2% and 11.7% YoY to SGD43 million and SGD23.9 million, respectively, with SingPost Centre enjoying higher rental income and improved occupancy.
Investment Summary
Despite the shortfall in net profit, SPOST’s share price rallied in October 2024 following reports of potential buyers for its Australian assets. Any proceeds from divestments could be used to reduce AUD-denominated debt. We have maintained our fair value estimate of SGD0.58, adjusting our model to account for higher debt costs and an increased cost of equity due to a higher beta input.
ESG Updates
SPOST maintained its ESG rating in March 2024. The company leads its global peers in corporate governance practices, with a majority-independent board and fully independent audit and risk committees. SPOST also excels in labour management initiatives and has strong carbon mitigation initiatives, such as electrifying its delivery fleet in Singapore.
Potential Catalysts and Investment Risks
Potential Catalysts
- Accretive acquisitions in the region at reasonable valuation multiples
- Feasible structural solutions for the long-term sustainability of the domestic postal business
- Injection of property assets into a REIT
Investment Risks
- Intensifying competition in logistics and mail
- Acquisition and integration risks, as well as execution hiccups
- Slowdown in e-commerce demand
Valuation Analysis
The valuation analysis for SPOST and its competitors is detailed below:
| Company |
Price/Earnings (FY25E) |
Price/Earnings (FY26E) |
Price/Book (FY25E) |
Price/Book (FY26E) |
EV/EBITDA (FY25E) |
EV/EBITDA (FY26E) |
Dividend Yield (%) (FY25E) |
Dividend Yield (%) (FY26E) |
ROE (%) (FY25E) |
ROE (%) (FY26E) |
| Singapore Post Ltd (SPOS.SI) |
19.1 |
16.1 |
– |
– |
8.5 |
7.9 |
2.3 |
2.7 |
5.0 |
5.8 |
| Deutsche Post AG (DPWGN.DE) |
12.4 |
10.7 |
1.8 |
1.7 |
6.0 |
5.5 |
5.2 |
5.4 |
15.1 |
16.6 |
| POS Malaysia Bhd (PSHL.KL) |
– |
– |
0.6 |
0.6 |
– |
– |
– |
– |
– |
– |
| GDEX Bhd (GDEX.KL) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Yamato Holdings Co Ltd (9064.T) |
19.3 |
14.7 |
0.9 |
0.9 |
5.5 |
4.6 |
2.9 |
3.0 |
5.4 |
6.6 |
Company Overview
As of 31 December 2023, Singapore Post is the country’s postal service provider and is developing its e-commerce logistics capabilities. The company is focusing on several key themes for its next phase:
- Establish market leadership in Singapore’s e-commerce logistics sector
- Build and scale a digitally enabled integrated B2B and B2C logistics network in Australia
- Reignite the international business and build resilient cross-border hubs and networks
- Drive towards cost leadership by optimizing costs and reengineering operations
In FY24, the revenue breakdown by segment and geography was as follows:
- By Segment: Property (4.6%), Logistics (69.1%), Post and Parcel (30.5%)
- By Geography: Singapore (34%), Australia (50%), Other countries (16%)
Financial Performance
| In Millions of SGD except Per Share |
FY2020 |
FY2021 |
FY2022 |
FY2023 |
FY2024 |
| Revenue |
1,313.8 |
1,404.7 |
1,665.6 |
1,872.3 |
1,686.7 |
| Cost of Revenue |
710.5 |
842.2 |
1,051.0 |
1,214.0 |
1,009.0 |
| Gross Profit |
603.3 |
562.5 |
614.6 |
658.2 |
677.7 |
| Operating Expenses |
467.2 |
488.8 |
499.4 |
569.1 |
594.1 |
| Operating Income or Losses |
136.1 |
73.6 |
115.2 |
89.1 |
83.6 |
| Interest Expense |
12.6 |
11.0 |
13.4 |
18.3 |
29.4 |
| Net Non-Operating Losses (Gains) |
-5.2 |
2.3 |
-5.6 |
2.8 |
-45.7 |
| Pretax Income |
128.6 |
60.3 |
107.4 |
68.0 |
99.9 |
| Income Tax Expense (Benefit) |
28.3 |
13.3 |
19.6 |
29.2 |
18.4 |
| Income Before XO Items |
100.3 |
47.0 |
87.7 |
38.8 |
81.5 |
| Net Income/Net Profit (Losses) |
91.1 |
47.6 |
83.1 |
24.7 |
78.3 |
| Net Inc Avail to Common Shareholders |
88.2 |
32.7 |
69.5 |
14.0 |
67.4 |
Profitability and Credit Ratios
| Profitability Ratios |
FY2020 |
FY2021 |
FY2022 |
FY2023 |
FY2024 |
| Return on Common Equity |
5.49 |
2.03 |
4.74 |
1.04 |
4.88 |
| Return on Assets |
3.73 |
1.72 |
3.25 |
1.41 |
2.73 |
| Return on Capital |
4.03 |
3.91 |
4.27 |
4.26 |
3.64 |
| Return on Invested Capital |
4.63 |
4.26 |
4.37 |
3.04 |
3.87 |
| Operating Margin |
10.36 |
5.24 |
6.91 |
4.76 |
4.96 |
| Pretax Margin |
9.79 |
4.29 |
6.45 |
3.63 |
5.92 |
| Income before XO Margin |
7.85 |
3.39 |
4.99 |
1.32 |
4.64 |
| Net Income Margin |
6.71 |
2.33 |
4.17 |
0.75 |
4.00 |
| Credit Ratios |
FY2020 |
FY2021 |
FY2022 |
FY2023 |
FY2024 |
| Total Debt/EBIT |
3.14 |
8.01 |
5.36 |
7.56 |
11.49 |
| Net Debt/EBIT
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