SingPost

1H14 net profit $76.8m (+5.3%) was in line. 2QFY15 net profit increased 5.5% to $37.6m. Excluding one-offs, underlying net profit increased 0.8% to $37.5m. Revenue rose 8.1% to $220.3m, mainly driven by ecommerce related activities, particularly in the logistics segment where business lines like Quantium Solutions, Singapore Parcels and Lock+Store. Operating margin inched down 0.2ppt to 21.3% as total expenses increased 10.2% to $188.7m on increased labor expenses. Domestic and international postage rates were increased 1 Oct, which could offset some costs in the mail biz. But otherwise, that business will remain weak. Nevertheless, prospects in ecommerce logistics appears promising, especially from contributions from businesses newly acquired. Management seems to have a good grasp on the capabilities they plan on unlocking throughout the value chain for a successful JV with Alibaba. Interim DPS of 1.25¢ unchanged. SingPost is trading at indicative yield of 3.22% and 28.4x annualized 1H14 P/E.