Macquarie Research initiated coverage on SingPost with an Outperform rating and TP of $2.15 citing SingPost’s transformation to an integrated e-commerce solutions firm being imminent.
It notes that acquisitions has lowered SingPost’s dependence on Singapore, delivered e-commerce clients, built critical mass in an overseas logistics footprint and ramped up end-to-end fulfilment capability.
Overseas revenue has grown contributions from 19% in FY13 to 40% in 1H16, with the e-commerce proportion rising from 24% to 29% in the same period and expected to hit about 50% by FY18.
The house forecasts volume growth with rising operating leverage to drive revenue and profit CAGRs of about 13% through to FY18.
Other positives include the re-opening of Singapore Post Centre in mid-2017 after a major redevelopment and almost doubling in retail gross floor area space plus a possible special dividend.
Despite being in the so-called “sweet spot”for its next phase of growth, key risks remain, namely, corporate governance issues, a share price overhang and execution risks in post M&A integration.
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