Singapore Post

Singapore Post: CIMB maintains Add on Singapore Post, despite the two concerns that have been well flagged over the past few weeks.

On the first concern, that Stirling Coleman (which independent director Tay) is a shareholder of, had arranged for the deal for FS Mackenzie and Famous Pacific Shipping. The forward valuations of these two companies were 9x and 6x, and CIMB thinks that these valuations are fair. Also CIMB reminded that Mr Tay had abstained from voting, and that they opine that the lapse was a genuine slip up, citing multiple changes in the Company Secretary role between 2013 and 2015.

Meanwhile, on SingPost after Dr Wolfgang’s departure, CIMB thinks that the transformation story remains in tact. Marcelo Wesseler, SP eCommerce’s CEO, has been spearheading expansion in the ecommerce business, and been relocated to the US to oversee the consolidation of TradeGlobal and Jagged Peak.

Near-term, expectations of earnings pressure are not new, due to: 1) loss of rental income from the redevelopment at SPC, and 2) consolidation of TradeGlobal, which is still lossmaking. In the medium term, we expect a re-rating to be driven by: 1) allaying of corporate governance concerns, and 2) realisation of synergies from recent M&As.

In the medium term, CIMB thinks a re-rating could be driven by the allaying of corporate governance concerns, and realisation of synergies from M&As. TP unchanged at $2.04.