Singapore Post (SingPost) is making waves with its proposed sale of its Australian logistics arm, valued at A$1 billion (S$856.4 million). On the surface, this might seem like a golden opportunity for shareholders, with promises of significant financial gains and debt reduction. But beneath the glitter lies a series of strategic complexities and potential red flags that demand scrutiny.
The Australian business, a crown jewel in SingPost’s portfolio, has become the group’s top profit contributor amidst the ongoing decline in its Singapore postal operations. As SingPost pivots to logistics, the decision to sell off this high-performing unit raises crucial questions about the group’s long-term strategy and financial stability.
Before casting their vote on this pivotal deal, here are 8 must-ask questions shareholders should bring to the boardroom:
1. Was the Strategic Review Truly Strategic?
The sale follows a strategic review aimed at optimizing SingPost’s Australian business. But were the review’s objectives met? Were there any mid-course changes, and what prompted them? Transparency here could clarify whether the sale aligns with long-term goals.
2. Is Keeping the Business a Better Bet?
If the Australian business isn’t sold, what opportunities and risks remain? Does SingPost have the resources to overcome challenges and continue building on its Australian success?
3. Can Non-Core Assets Fill the Gap?
Would selling non-core assets, such as shuttered post office spaces and the S$1.1 billion SingPost Centre, suffice to meaningfully reduce debt without divesting its Australian crown jewel?
4. Why Not Go Public with the Australian Arm?
Was an IPO considered? A public listing could allow SingPost to retain Australian profits while addressing debt. Why was this option discarded?
5. Is Selling Australia at Odds with SingPost’s Logistics Ambitions?
SingPost aims to become a global logistics leader. How does selling a top-performing logistics business align with this goal? Is the sale contradicting its stated strategy?
6. What’s Plan B for Replacing Australia’s Profits?
With the Australian unit contributing 66.1% of SingPost’s first-half profits for FY2025, what’s the strategy to replace this sizeable income stream? How long will it take to achieve comparable returns?
7. Will Future Acquisitions Mean More Debt?
The Australian acquisition saddled SingPost with significant debt. Post-sale, how does the board plan to fund future growth while avoiding another debt spiral?
8. Is a Delisting in the Cards?
With non-core assets sold and Australian profits gone, could SingPost consider delisting? If so, will shareholders receive full payouts from the sale proceeds?
The Backdrop: What’s at Stake?
SingPost’s Australian logistics arm contributed S$20.3 million to the group’s first-half profits in FY2025, making up 66.1% of its total S$30.7 million profit. While the sale offers a net cash position and a pro forma boost in earnings per share from S$0.035 to S$0.162, the group’s reliance on this high-performing unit is undeniable.
The debt tied to Australian acquisitions—A$614.8 million as of September—makes the deal tempting. However, the divestment raises questions about the group’s future profitability, alignment with strategic goals, and ability to navigate market challenges.
The Verdict? The Jury’s Out
The proposed sale is a double-edged sword. Shareholders must weigh short-term financial gains against the long-term implications for SingPost’s logistics ambitions and financial health. Armed with these eight questions, they can ensure the board makes the right call for the future of SingPost.
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