SingPost

SingPost: (S$1.91) Alibaba increases stake and deepens business ties
SingPost and Alibaba have taken a positive step towards a mutually beneficial working relationship, where both parties will leverage each other's expertise and leadership in their respective business areas to create a formidable comprehensive e-commerce business.

Among the three new initiatives, Alibaba, SingPost's second largest shareholder after SingTel, will purchase an additional 107.6m new shares for $187.1m ($1.74/share), raising its stake from 10.2% to 14.5%.

In addition, the e-commerce giant will invest up to $92m for a 34% stake in SingPost's wholly-owned subsidiary Quantium Solutions International (QSI), which provides e-commerce logistics services across the Asia-Pacific.

Both SingPost and Alibaba have also penned a joint strategic business development framework to further improve efficiency and integration between them, to achieve scale across the entire e-commerce logistics value chain.

With SingPost's relative advantage in providing logistics solutions across the Asia Pacific region and Alibaba's domination in e-commerce business, the duo looks set to take a sizeable bite of rapidly growing e-commerce market.

This cannot come at a more opportune time as SingPost is seeking to boost its e-commerce business to offset its declining postal revenues.

Market Insight continues to like SingPost for its solid growth strategy.

At the current price, SingPost trades at 22.7x forward P/E, supported by an indicative yield of 3.3%.