Thursday, November 7th, 2024

Singapore Post’s Strategic Transformation: Unlocking $2.5 Billion in Assets by 2027






Singapore Post and Global Logistics Companies: A Comprehensive Financial Analysis

Singapore Post and Global Logistics Companies: A Comprehensive Financial Analysis

Date: November 6, 2024

Broker: CGS International Securities

Singapore Post Ltd: Awaiting Value Unlocking Initiatives

Singapore Post Ltd (SPOST) has been under the microscope as it undergoes a strategic transformation aimed at unlocking significant value from its assets. Despite a promising start with 1HFY3/25 revenue growing by 20% year-on-year to S\$992.4 million, underlying PATMI only reached S\$25 million, an 88% increase year-on-year but below expectations. This shortfall is attributed to weaker-than-expected margins in both Singapore and Australia operations.

SPOST’s Singapore postal business returned to an EBIT loss of S\$0.9 million due to high operating costs and one-off investments in technology upgrades. In Australia, the slower-than-expected EBIT improvement was a result of lower volumes and pricing pressures in its 3PL business amid macroeconomic headwinds.

Levers for a Better 2HFY3/25

SPOST is expected to benefit from business integration in Australia in 2HFY25F, with potential synergies that could increase operating profit margins by up to 2 percentage points, translating into an annual EBIT increment of A\$30 million. In Singapore, efforts to secure the long-term commercial viability of postal services are underway, including rationalizing physical post office branches.

Strategic Options and Monetization Opportunities

SPOST is evaluating strategic options for its Australian operations and exploring monetization opportunities for non-core assets. Key decisions expected by end-FY25 include the sale of the freight forwarding business and assessment of sale options for Australian assets, estimated at a combined value of S\$1.1 billion.

Financial Outlook and Recommendations

The report reiterates an “Add” rating for SPOST, believing that it has S\$2.5 billion worth of assets ready for value unlocking over the next three years. The target price is lowered to S\$0.58, with successful execution of value unlocking plans as a potential re-rating catalyst. Downside risks include prolonged weakness in international business volumes and forex translation impacts.

Global Logistics Companies: An In-Depth Analysis

GDEX Bhd

GDEX Bhd is not rated in this report, with no available financial data or projections. It remains a notable player in the logistics sector.

United Parcel Service Inc (UPS)

UPS, a major player in the logistics industry, has a market capitalization of US\$114.6 billion. It is projected to have a core P/E ratio of 17.9x for CY2024F and 15.2x for CY2025F, with a 9.1% three-year EPS CAGR. The company boasts impressive ROE figures of 35.6% for CY2024F and 39.7% for CY2025F, and EV/EBITDA ratios of 10.7x and 9.5x, respectively.

FedEx Corp (FDX)

FedEx Corp, another logistics giant, has a market capitalization of US\$67.3 billion. It is expected to have a core P/E ratio of 16.0x for CY2024F and 12.3x for CY2025F, with a 14.3% three-year EPS CAGR. Its ROE figures are 16.4% for CY2024F and 17.1% for CY2025F, and EV/EBITDA ratios of 8.0x and 6.9x, respectively.

Deutsche Post AG

Deutsche Post AG, with a market capitalization of US\$44.7 billion, is projected to have a core P/E ratio of 12.1x for CY2024F and 10.5x for CY2025F. The company has a modest 5.6% three-year EPS CAGR, with ROE figures of 14.9% for CY2024F and 16.5% for CY2025F. Its EV/EBITDA ratios stand at 5.9x and 5.4x, respectively.

DSV A/S

DSV A/S, a leading logistics provider, has a market capitalization of US\$51.3 billion. It is expected to have a core P/E ratio of 28.1x for CY2024F and 24.4x for CY2025F, with a 6.1% three-year EPS CAGR. The company’s ROE figures are 13.2% for CY2024F and 13.7% for CY2025F, with EV/EBITDA ratios of 17.8x and 15.2x, respectively.

Kuehne + Nagel International AG

Kuehne + Nagel International AG, with a market capitalization of US\$28.7 billion, is projected to have a core P/E ratio of 20.6x for CY2024F and 19.6x for CY2025F. Despite a -3.6% three-year EPS CAGR, the company has impressive ROE figures of 38.2% for CY2024F and 35.2% for CY2025F, and EV/EBITDA ratios of 10.5x and 10.2x, respectively.

SF Holding Co Ltd

SF Holding Co Ltd, a major logistics company, has a market capitalization of US\$30.7 billion. It is expected to have a core P/E ratio of 22.3x for CY2024F and 19.1x for CY2025F, with a 17.3% three-year EPS CAGR. The company’s ROE figures are 10.3% for CY2024F and 11.2% for CY2025F, with EV/EBITDA ratios of 8.5x and 7.7x, respectively.

ZTO Express Cayman Inc

ZTO Express Cayman Inc, with a market capitalization of US\$18.6 billion, is projected to have a core P/E ratio of 13.4x for CY2024F and 11.5x for CY2025F. The company has a 14.2% three-year EPS CAGR, with ROE figures of 15.6% for CY2024F and 16.6% for CY2025F. Its EV/EBITDA ratios stand at 8.6x and 7.4x, respectively.

CH Robinson Worldwide Inc

CH Robinson Worldwide Inc, a prominent logistics provider, has a market capitalization of US\$12.4 billion. It is expected to have a core P/E ratio of 24.4x for CY2024F and 21.7x for CY2025F, with a 25.1% three-year EPS CAGR. The company’s ROE figures are 33.5% for CY2024F and 32.1% for CY2025F, with EV/EBITDA ratios of 16.5x and 15.4x, respectively.

XPO Inc

XPO Inc, with a market capitalization of US\$16.1 billion, is projected to have a core P/E ratio of 38.2x for CY2024F and 31.4x for CY2025F. The company has a substantial 50.5% three-year EPS CAGR, with ROE figures of 28.7% for CY2024F and 25.8% for CY2025F. Its EV/EBITDA ratios stand at 15.4x and 13.8x, respectively.

Yamato Holdings Co Ltd

Yamato Holdings Co Ltd, a significant player in the logistics sector, has a market capitalization of US\$3.7 billion. It is expected to have a core P/E ratio of 14.9x for CY2024F and 17.2x for CY2025F, with a 3.9% three-year EPS CAGR. The company’s ROE figures are 4.9% for CY2024F and 5.5% for CY2025F, with EV/EBITDA ratios of 6.4x and 5.3x, respectively.

JD Logistics Inc

JD Logistics Inc, with a market capitalization of US\$13.3 billion, is projected to have a core P/E ratio of 18.7x for CY2024F and 15.2x for CY2025F. The company has an impressive 119.2% three-year EPS CAGR, with ROE figures of 9.3% for CY2024F and 10.3% for CY2025F. Its EV/EBITDA ratios stand at 6.0x and 5.3x, respectively.

Sinotrans Ltd

Sinotrans Ltd, a notable logistics company, has a market capitalization of US\$4.7 billion. It is expected to have a core P/E ratio of 5.9x for CY2024F and 5.4x for CY2025F, with a 3.4% three-year EPS CAGR. The company’s ROE figures are 10.1% for CY2024F and 10.3% for CY2025F, with EV/EBITDA ratios of 6.3x and 6.1x, respectively.

Yunda Holding Co Ltd

Yunda Holding Co Ltd, with a market capitalization of US\$3.4 billion, is projected to have a core P/E ratio of 11.7x for CY2024F and 10.0x for CY2025F. The company has a 19.9% three-year EPS CAGR, with ROE figures of 10.2% for CY2024F and 10.9% for CY2025F. Its EV/EBITDA ratios stand at 4.8x and 4.4x, respectively.

Kerry Logistics Network Ltd

Kerry Logistics Network Ltd, a significant player in the logistics sector, has a market capitalization of US\$1.7 billion. It is expected to have a core P/E ratio of 8.6x for CY2024F and 8.8x for CY2025F, with a 26.1% three-year EPS CAGR. The company’s ROE figures are 8.0% for CY2024F and 7.6% for CY2025F, with EV/EBITDA ratios of 4.8x and 4.9x, respectively.

CJ Logistics Corp

CJ Logistics Corp, with a market capitalization of US\$1.5 billion, is projected to have a core P/E ratio of 7.5x for CY2024F and 6.6x for CY2025F. The company has a 12.4% three-year EPS CAGR, with ROE figures of 6.8% for CY2024F and 7.4% for CY2025F. Its EV/EBITDA ratios stand at 5.0x and 4.8x, respectively.

Logwin AG

Logwin AG, a notable logistics provider, has a market capitalization of US\$763 million. It is expected to have a core P/E ratio of 11.0x for CY2024F and 11.6x for CY2025F, despite a -10.0% three-year EPS CAGR. The company’s ROE figures are 17.6% for CY2024F and 15.5% for CY2025F, with EV/EBITDA ratios of 3.7x and 3.8x, respectively.

Postal Companies: A Detailed Analysis

Japan Post Holdings Co Ltd

Japan Post Holdings Co Ltd, a major postal company, has a market capitalization of US\$29.9 billion. It is projected to have a core P/E ratio of 17.9x for CY2024F and 12.1x for CY2025F, with a 15.5% three-year EPS CAGR. The company’s ROE stands at 3.1% for CY2024F and 3.8% for CY2025F.

bpost SA

bpost SA, with a market capitalization of US\$495 million, is expected to have a core P/E ratio of 4.1x for CY2024F and 3.6x for CY2025F. The company has a substantial 30.1% three-year EPS CAGR, with ROE figures of 12.7% for CY2024F and 9.9% for CY2025F. Its EV/EBITDA ratios stand at 1.6x and 1.5x, respectively.

Pos Malaysia BHD

Pos Malaysia BHD, a key player in the postal sector, has a market capitalization of US\$57 million. The company has a notable -23.6% three-year EPS CAGR, with ROE figures not available for CY2024F.

ASX-Listed Logistics Companies: An Overview

Qube Holdings Ltd

Qube Holdings Ltd, with a market capitalization of US\$4.4 billion, is projected to have a core P/E ratio of 30.2x for CY2024F and 24.7x for CY2025F. The company has a 17.8% three-year EPS CAGR, with ROE figures of 7.7% for CY2024F and 8.6% for CY2025F. Its EV/EBITDA ratios stand at 15.6x and 14.2x, respectively.

CTI Logistics Ltd

CTI Logistics Ltd, a significant logistics provider, has a market capitalization of US\$100 million. It is expected to have a core P/E ratio of 9.2x for CY2024F, despite a -20.4% three-year EPS CAGR. The company’s ROE stands at 12.7% for CY2024F, with an EV/EBITDA ratio of 4.6x.

Silk Logistics Holdings Ltd

Silk Logistics Holdings Ltd, with a market capitalization of US\$71 million, is projected to have a core P/E ratio of 14.5x for CY2024F and 8.5x for CY2025F. The company has a modest 2.7% three-year EPS CAGR, with ROE figures of 10.8% for CY2024F and 13.1% for CY2025F. Its EV/EBITDA ratios stand at 4.7x and 4.3x, respectively.

Move Logistics Group Ltd

Move Logistics Group Ltd, a notable logistics company, has a market capitalization of US\$13 million. The company has an EV/EBITDA ratio of 23.0x for CY2024F, with a notable 353.0% ROE figure.

ESG and Financial Highlights

Singapore Post Ltd is committed to achieving net-zero carbon emissions for its Singapore operations by 2030 and globally by 2050. The company has already reduced its absolute Scope 1 and 2 emissions by 26% from the FY18/19 baseline level. This commitment signifies a strong dedication to environmental protection, with ongoing initiatives to optimize resources, upgrade fleets, and explore alternative fuel-saving options.

Financial Summary

SPOST’s revenue growth is projected to be 18.3% for FY25F, with operating EBITDA growth of 36.7%. The company’s operating EBITDA margin is expected to improve to 11.4%, with an ROE of 4.1% for CY2024F and 5.1% for CY2025F. Key drivers include revenue growth from the Postal/Mail segment and profitability improvements in the Logistics and Property segments.


UOB Kay Hian Research increased the target price of Marco Polo Marine(SGX:5LY)

UOB Kay Hian Research has given a positive recommendation for Marco Polo Marine (MPM SP), highlighting the company’s promising outlook due to higher charter rates and its expansion into Korea. Given the increase in...

ITMAX System: Gaining Momentum with Strong Bullish Signals

Date: October 22, 2024Broker: CGS International Overview ITMAX System is a Malaysian company specializing in providing integrated IT solutions. The company focuses on offering advanced surveillance, communications, and information technology systems to various sectors,...

West China Cement Stock Analysis: Bullish Trend and Technical Buy Signal for 2024

Hong Kong Retail Research Report – Comprehensive Analysis Hong Kong Retail Research Report: Comprehensive Analysis Trendspotter Date: November 4, 2024 Broker: CGS International Market Recap and Key Insights Bloomberg reported a late-week rebound in...