Singapore Post

Singapore Post, the embattled e-commerce logistics aspirant has seen no respite to share price since a slew of negative events recently.

Apart from weak market sentiment, the stock was spooked by the abrupt resignation of CEO Wolfgang Baier, the poster boy of SingPost’s transformation story from an traditional mail provider into a regional e-commerce logistics player.

Complicating matters were corporate governance lapses raised by the Business Times and academic Mak Yuen Teen, which prompted SingPost to launch a special audit to investigate an interested party transaction in 2014. The group admitted that it had not disclosed independent director Keith Tay Ah Kee’s vested interests in Stirling Coleman Capital, the arranger of FS Mackenzie acquisition.

At latest, the Singapore Institute of Directors has called for the special audit to go beyond the specific lapse, but also encompass any other board practices that have not fully complied with the Code of Corporate Governance. To-date, neither the auditor nor the scope of audit have been confirmed.

Until questions surrounding SingPost’s corporate governance are adequately answered, and a new and competent CEO is installed, share price will likely remain in an overhang. As a preemptive and prudent move, the group might also write down some of the investments it has made in the past.

Given such, there are downside risks to SingPost’s share price. Based on a historical average yield of 5.2%, the stock could be looking at a price floor of $1.31, implying a possible downside of ~15% from current levels.

As such, Market Insight is exiting its position from SingPost, taking a loss of 6.1% from its Dec’15 closing price of $1.64. This contrasts with the street's rating of 5 Buys and 3 Holds (consensus TP of $2.18).