$SINGAPORE POST LIMITED(S08.SI)$ :A Turnaround Story?

When I search stocks in SGX, I look for simple business and easy to understand.

Then I found Singapore Post Ltd at the first place. Singpost owns 56 post offices, 7delivery bases, 300 self-service automated Machines (“SAM”) kiosks, 801 posting boxes and over 9,700 PopStation lockers across 140 locations in Singapore and several online portals. That makes SingPost one of the largest retail distribution networks in Singapore. SingPost was listed on the Main Board of the SGX-ST on 13 May 2003. Its largest shareholders are Singapore Telecommunications Limited and Alibaba Investment Limited.

SingPost business segment consists of:

1.Post & Parcel

2. Logistics (Freight forwarding and eCommerce)

3. Property

From Financial Statement standpoint, SingPost previously booked good result with gross margin and net margin up to two digits but started to decline to single digit as the post & parcel segment has decreasing demand. The Operating Performance, ROA, ROE and ROIC deteriorated as we can see from Morning star’s data.

Meanwhile, the management doing the strategic move by acquired 23% shares and voting interests in Freight Management Holding Pty Ltd ((“FHM”). As the result, the Group’s interest in FMH increases from 28% to 51%, granting it control of FMH.

The principal activity of FMH is the provision of integrated supply chain and distribution solutions to customers in Australia through a 4th party logistics technology platform. Having FMH as a subsidiary will enable the Group to better derive synergies and build scale to futher capitalize on the accelerated growth in eCommerce in Australia.

For the latest financial performance, SingPost has much better performance.

Will SingPost consistently perform better since its logistics segment start to grow larger to compensate the decreasing post & parcel segment? We’ll see, only time will tell.