Friday, June 20, 2014
Sing Post: DBSV expects new business from Alibaba and new acquisitions to uplift Singapore Post’s FY16F earnings significantly. The house projects 7% EPS dilution in FY15F after issuing new shares to Alibaba for its 10.35% stake in SPOST. However, DBSV sees EPS accretion from FY16F onwards. With S$482m net cash, SPOST may acquire profitable companies across the e-commerce value chain. DBSV has been early believers in SPOST’s low-cost and pan-Asia e-commerce strategy. Alibaba’s entry convinces further that SPOST is well-positioned to benefit from ecommerce sales, which according to eMarketer, is expected to see CAGR of 29% in Asia over the next 4-years. Maintain BUY with target price raised to $2.00 (Prev $ 1.60).