Wednesday, April 27, 2016


SingPost: Real estate consultancy firm, Knight Frank notes that self storage industrial space is rising in popularity and expanding its footprint in Singapore.

This is expected to provide a minor boost for SingPost, which is currently the domestic market leader with 15 self-storage facilities in the country. Self Storage is part of SingPost's other logistics segment, which accounted for 8.9% of the group's total 9M16 revenue.

The consultant points to three main trends that are contributing to the popularity of the space. These are: 1) shrinking living spaces, 2) rising consumerism, 3) higher business space rental costs.

In particular, e-commerce players are embracing self-storage solutions for their logistical needs. Rainbow Lab which focuses on Hello Kitty products, and Animal Merchandise which supplies to department stores such as Takashimaya, Robinsons, Metro, BHG etc were notable mentions.

All is not a bed of roses for the self-storage industry though. With the influx of about 6.9m sf of warehousing space to be completed by the end of the year, the industry could face some headwinds amidst a muted economic environment as businesses and households restrain spending on storage rental costs.

However, unlike traditional warehousing where there is a lengthy lock-in period, the self-storage industry appears to be better positioned to weather through the current economic doldrums, given its flexible spatial and service offerings.

All in, the growth trajectory of the self-storage industry is seen to be supported by a growing community of start-ups, SMEs and affluent individuals, who utilise such spaces along with dedicated services to better support their ever-changing needs.

SingPost is currently trading at 20.9x forward P/E with an indicative dividend yield of 4.3%. THe street is fairly bullish on the counter with 5 Buy, 3 Hold ratings and consensus TP $1.85.

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