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May I know your buy price and size ? Mine was at 1.13 for 20 lots. Have faith in your choice, as it is only a matter of time before profit kicks in.
UOB KH - Steady 2QFY08 earnings growth for an attractive dividend play
SingPost reported 2QFY08 net profit of S$39.7m, up 9.8% yoy. Excluding onetime items (comprising 2QFY08 sale of Clementi Central HDB shop unit), underlying net profit was up 10.9% yoy to S$34.8m. Revenue rose 8.8% yoy.
Direct mail was star performer in mail segment. Mail revenue rose 8.5% (or S$7m) yoy, and accounted for 73% revenue share, due to mail volume increasing 9.9% yoy. This came on the back of a strong 11.7% rise in bulk mail (80% share of domestic mail), due to a) Direct Mail?s increase of 15.1% (40% share of bulk mail); and b) business and others increasing 9.1%. Public mail (balance 20% share of domestic mail), on the other hand, recorded a mild 1.3% yoy volume growth. Correspondingly, mail operating profit rose 8.9% yoy.
Financial services drove retail segment. Retail revenue rose 9.0% (or S$1.3m) yoy. Financial services revenue surged 29.1%, and accounted for 47% of retail revenue. Remittances and unsecured lending together contributed 80% of financial services revenue.
Underlying operating margin of 37.1% is similar to 2QFY07. Mail operating margin was 39.1%, vs 2QFY07?s 39.0%. Retail operating margin also widened marginally to 16.3% (from 2QFY07?s 16.2%). These were offset by logistics operating margin narrowing to 14.3% (from 2QFY07?s 15.5%), as logistics is a very competitive business.
Robust cashflow generation. Net cash inflow from operating activities was S$79.7m in 1HFY08, up from 1HFY07?s S$74.6m. 1HFY08 capex was a low S$7.8m, or 3.3% of revenue.
High dividend yield. SingPost declared an interim dividend of 1.25¢ ps. SingPost aims to pay out 80-90% of net profit or a minimum of 5¢ ps per annum. We are forecasting 6.8¢ ps total dividends for FY08 (based on 85% payout ratio), giving a yield of 5.5%, which is higher than 3-mth SIBOR of 2.6%.
SingPost remains a BUY. We forecast 2HFY08 net profit to be driven by the increase in postage rates effective 18 Dec 06 and 1 Jul 07, as well as mail volume expansion. SingPost is attractive based on our DCF valuation of S$1.43 per share ? we have assumed a terminal growth rate of 0.7%, a WACC of 5.8% (which factors in cost of debt of 4.6% and cost of equity of 8.2%).
KIM ENG - In Pursuit of Growth
♦ Another positive quarter
SingPost reported 2Q08 underlying net profit of $34.8m (+10.9% Y/Y) and underlying EBITDA of $51.4m (+6.5% Y/Y) on revenue of $116m (+8.8% Y/Y). All segments posted higher revenue and operating profits. We had earlier assumed that operating margin would improve from FY07 due to operating leverage. As SingPost?s operating margin is relatively stable, we have thus trimmed our margin forecasts.
♦ Domestic mail volume trending up
The main growth driver was domestic mail (Fig 1), which was bolstered by higher mail volumes and buoyed by price adjustments. Within domestic mail, direct mail volume increased 15.1% Y/Y while business and government mail volume increased 9.1%. We view the stronger mail volume as indicative of the strong economy and SingPost?s effective marketing of its direct mail services.
♦ Actively pursuing growth
We continue to see SingPost growth initiatives bearing fruits, particularly in international mail (as publishers increase their posting volume) and financial services (Fig 1). The company is actively expanding its vPost and hybrid mail business in the region. A new CEO at the helm could also bring a new dimension to SingPost?s business.
♦ Potential bonus from relocating post offices
Upside to our forecasts could arise from SingPost?s sale of any of its post offices. SingPost has an ongoing optimisation programme to relocate some of its post offices to locations which are ?less prime?. We think the sale of Singapore Post Centre (SPC) is less likely as SingPost is currently benefiting from rising rental rates at SPC.
♦ Reducing margin forecast, downgrade to HOLD
In line with its dividend policy, SingPost has declared an interim dividend of 1.25cts/share for 2Q08. We forecast FY09 dividend of 6.9cts/share and arrived at a target price of $1.38 (implied FY09 dividend yield of 5%). Downgrade to HOLD.
DBS Vickers - Singapore Post
No significant catalyst in sight
Hold (Downgrade) S$1.23; Price Target : 12-month S$ 1.30 (Prev S$ 1.45)
Story: Net underlying profit of S$34.8m was up 11% y-o-y but 5% lower than our expectations of S$36.5m.
Point: Lower than expected mail revenue coupled with higher operating expenses were the main culprits. We do not expect operating margins to improve anymore due to higher labor-related costs and greater price competition in the logistics segment.
Relevance: We have lowered our FY08 and FY09 core earnings estimates by 9% and 5% respectively. Our one-year DCF derived (WACC 6%, terminal growth
1%) target price is S$1.30. Due to limited upside, we downgrade Singpost to HOLD.
CIMB - Singapore Post (S$1.23) - 2QFY08 results - Delivers again
Core earnings in line. 2QFY08 core earnings of S$35.5m (+9.6% yoy) was in-line with consensus and our estimates. 1HFY08 core earnings formed 50% of our full year FY08 estimates. Reported S$39.7m earnings benefited from S$5.2m of exceptional gains from the sale of property at Clementi Central. This was another solid set of results with 8.8%yoy revenue growth with steady margins. As expected, quarterly DPS of 1.25 cts was also announced.
Revenue up 8.8% yoy. Logistics led growth at 11.5%yoy as a result of increased contributions from Speedpost and warehousing, fulfilment & distribution. Mail and Retail grew by 8.5%yoy and 9.0%yoy respectively. Mail revenue growth was driven by higher mail volumes and price adjustments. Retail revenue growth was driven by financial services (+29%yoy) and vPost on-line shopping transactions but these gains were dampened by decline in agency/bill presentment services.
Operating margin steady yoy at 37.4%. Slight operating margin improvements at Mail and Retail operations helped offset margin decline (-130bps yoy to 14.2%) at Logistics which faced increased competition and volume-related cost pressure.
New CEO likely to give SingPost greater regional focus. The new CEO, Mr. Wilson Tan joined SingPost just two weeks ago and did not indicate any change in SingPost?s strategic direction. Mr. Tan comes with a strong IT background and regional experience. We believe that Mr. Tan?s arrival will step up the regional agenda in SingPost?s current growth strategy. SingPost has been extending its regional reach with initiatives to grow the hybrid mail and vPOST businesses in the regional markets due to limited domestic growth prospects. Key initiatives implemented during 1HFY08 include hybrid mail expansion into HK and Thailand (in addition to Philippines and Malaysia) as well as continued vPOST regional rollout into Australia and India (in addition to Malaysia and Thailand).
Maintain Outperform and target price of S$1.41. Our target price is based on DDM (cost of equity: 6.5%, terminal growth: 1.5%). FY08 earnings estimate is raised by 3% to reflect gains in property sales. SingPost offers reliable earnings delivery and forward yields of 5.5-6.0% for the next three years. We see scope for dividends to surprise on upside given current net gearing of 1.2x vs. target of 2.0x.
Singapore Post
The postal operator, which also runs an online shopping service and provides unsecured personal loans, posted S$39.66 million in net profit for the quarter ended September, up from S$36.13 million a year earlier.
According to the average of six analysts' forecasts compiled by Reuters Estimates the firm was expected to post a 9 percent rise in full-year net profit to S$152.96 million for the 12 months to the end of March 2008.
Singapore Post ? Appointed Wilson Tan Wee-Yan as its new CEO. Mr Tan, who takes the reins today, will also join the SingPost board as a director. His appointment follows a six-week search after former CEO Lau Boon Tuan resigned at the end of August to pursue other opportunities. Mr Tan, 49, joins SingPost from NEC Solutions Asia Pacific Pte Ltd (Singapore), where he was managing director. Since 1993, he has held key management positions with regional responsibilities in multinational companies including Apple Computers, Informix, Software AG and Xerox Corporation, developing and growing the businesses in Asia and the region. At SingPost, he takes over a group in the process of transforming itself from a dominant provider of postal services to an organisation that offers a wider range of products, including agency and financial services.
so much uncertainty leh in this
a better alternative will me SMRT...stable income with sure-increase annual fare increments..hee
But the buying volume is very high as compare to selling. Should I hold or sell, any advise ?