SingPost: Monetizing Non-Core Assets

SingPost, trading at \$0.555 (+1.5 cents), remains under the spotlight following Maybank’s report on its potential sale of Famous Holdings, the freight forwarding business. This sale is expected to conclude by the end of January 2025, potentially raising \$80 million to \$100 million in proceeds. SingPost’s ongoing strategy to monetize non-core assets aims to recycle capital effectively.

The company plans to allocate proceeds from these sales to reduce debt, support growth investments, and return value to shareholders. However, SingPost has clarified that no definitive or binding agreements regarding Famous Holdings have been signed yet. Furthermore, the proposed divestment of SingPost Australia Investments Pty Ltd, which holds Freight Management Holdings Pty Ltd, awaits shareholder approval in February 2025.

Despite potential delays, the company’s market cap stands at S\$1.2 billion and trades at 18x forward P/E and 1x P/B. Bloomberg’s consensus suggests a one-year target price of \$0.74, implying a 32% potential return. Lim & Tan Securities maintains an “Accumulate on Weakness” rating, citing confidence in SingPost’s asset monetization strategy and alignment with its largest shareholder, Singtel.

17Live: Reinventing Live-Streaming

17Live, trading at S\$0.94, has ambitious plans to reshape live-streaming by fostering human connections akin to Japanese izakaya chefs hosting small gatherings. Despite its unique approach, the platform faces challenges in Singapore public markets, where its share price has fallen substantially from its SPAC IPO price of S\$5.

In the first half of 2024, the company swung to a net profit of US\$1.9 million from a net loss of US\$118.2 million in the previous year. However, operating revenue declined 33% to US\$101.1 million due to reduced live-streaming revenue and currency headwinds.

To combat streamer attrition, 17Live has revised its policies, allowing streamers to broadcast on multiple platforms. The company also aims to introduce competitive events to boost engagement, offering prizes such as monetary rewards, exposure in runway shows, and advertisements. Its V-Liver virtual-influencer segment, which grew 211% year-on-year, is another growth area.

17Live trades at 13.9x forward P/E and 1.3x P/B with a market cap of S\$172 million. Bloomberg forecasts a one-year target price of S\$1.80, indicating a 91% potential upside. The company has also started a share buyback program, acquiring 166.6k shares at prices between 90 cents and S\$1.03, signaling confidence in its long-term prospects.

Market Dynamics and Fund Flows

Institutional investors recorded net buying of S\$52.9 million in the week ending December 23, 2024, a stark reversal from the previous week’s net sell of S\$385.7 million. Retail investors, on the other hand, turned net sellers, offloading S\$73.6 million compared to a net buy of S\$540 million the week before.

Key institutional net buys included UOB (+S\$31.2 million), Seatrium (+S\$18.2 million), and OCBC (+S\$18.1 million). Retail investors heavily favored DBS (+S\$32.2 million) and Singapore Post (+S\$15.8 million). Conversely, institutional net sells targeted DBS (-S\$23.1 million) and SingPost (-S\$15.7 million), while retail investors sold off Seatrium (-S\$41.3 million) and UOB (-S\$24.8 million).

Dividend Announcements

Several companies have announced dividends for early 2025:

• FNN: 4 cents final dividend, ex-date January 23, payable January 28.
• Frasers Property: 4.5 cents final dividend, ex-date January 23, payable February 14.
• PNE Industries: 2 cents final dividend, ex-date January 27, payable February 14.
• Thai Beverage: THB47 cents final dividend, ex-date February 6, payable February 28.
• LHN Ltd: 1 cent final dividend, ex-date February 6, payable February 21, and a special dividend of 1 cent, ex-date April 9, payable May 30.

Macro Market Insights

The Federal Reserve recently implemented a 25 basis point rate cut, bringing the fed funds rate to a 4.25%-4.5% range. However, the FOMC struck a hawkish tone, projecting a slower pace of easing in 2025. The dot plot now anticipates only two rate cuts in 2025, reflecting concerns over resilient inflation.

Weak manufacturing data, including the December Philly Fed Manufacturing Survey, which fell to -16.4, and contractionary trends in new orders and shipments, underscore a cautious outlook. Investors are advised to overweight government bonds and gold relative to risk assets and commodities like oil and copper.

China and Hong Kong Real Estate Developments

China’s housing regulator has pledged to stabilize the real estate market in 2025 by promoting reforms in housing sales systems and expanding urban village renovations. Measures such as reduced mortgage rates, lower down payments, and tax incentives have already shown positive results, with home transactions rising year-on-year in recent months.

These efforts aim to balance the supply of commercial and affordable housing, addressing the needs of new citizens, young people, and migrant workers. Policymakers remain committed to reviving the sector while avoiding over-leverage issues that plagued developers in 2021.