Sing Post

Sing Post: Sealed a landmark investment deal with Alibaba Group to issue 220.1m new and treasury shares at $1.42 each (8.4% discount to last close of $1.55), to the world’s largest and fastest growing internet-based e-commerce firms with a projected net worth of over US$150b by 2016. Post-issue, Alibaba will control 10.4% of the enlarged share base of the postal company, making it the second largest shareholder, just behind SingTel’s 23.5%. Proforma FY14 NTA will increase from 36.52¢ to 47.22¢ per share. In conjunction with the proposed share issue, both companies has entered into a business cooperation to create a defining platform to tap into e-commerce opportunities in South-east Asia and beyond by giving access to SingPost’s international logistics capabilities, infrastructure and delivery networks, as well as end-to-end solutions for Alibaba’s customers and merchants. From the net proceeds of $308m, one-third will be earmarked for its e-commerce business, another one-third will be used for M&As and property development projects and the rest for working capital purposes. The strategic investment and business collaboration with Alibaba is a signigfiant milestone for SingPost in its transformational plan to become a regional key e-commerce logistics player. The group stands to benefit from Alibaba’s expertise in e-commerce, technology and financial backing to pursue its growth opportunities and development pace in the region. The group's e-commerce and related businesses currently account for 26% of total revenue. This must come as a breath of fresh air for SingPost, which is facing falling revenue from its mail and traditional logistics businesses. At $1.62, Sing Post trades at 21x forward P/E and offers a 3.8% dividend yield.