Sing Post

Sing Post: 1HFYMar13 results broadly in line. Revenue increased by 7.8% yoy to $305m, with growth mainly driven by acquisition. Mail revenue increased by 12.5% yoy in 2Q13 driven by the consolidation of Novation Solutions acquired in May 2012. This acquisition makes Mail sector to be the main revenue driver despite the continuous decline in letter volumes. The growth in Logistics sector slowed down compared with 1Q. Net profit was $70.9m, +1.6% yoy. Excluding one-off items, underlying net profit was $69m, -0.6%. Despite respectable growth in top line, 1H operating profit increased by only 1.7%. In short term it is very hard to see significant improvement in bottom line likely because SingPost is still investing very heavily now. SingPost declared interim div of 1.25cts, unchg yoy. The co has kept its annual dividends at 6.25cts per year for 6 years, and will likely continue the track record this year. Mgt says the group continues to make in its transformation initiatives, and the necessary resources nad competencies such as talent and technology continue to be put in place to drive the group’s transformation program. At the same time, it continues to explore acq opportunities in Spore and the region to accelerate the transformation. Besides the growth initiatives, the group is also focused on cost mgt and optimization measures to manage cost pressures. It exploring and investing in new technologies and resources to further enhance pdtvity. Notes as it expands into lower margin businesses, profit margins are expected to shift downwards. Maybank Kim Eng has a Hold rating with TP $1.10, pending analyst briefing. The stock trades at 17.1x P/E, 5.4% yield.