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  • Gemmie_kirito's Avatar
    37 posts since Apr '17
    • Singapore Post: Good Execution Required

      • Correction in share price
      • Still some uncertainty ahead
      • Wait for better signs

      Share Price Has Corrected

      Since our last report on 15 May, “eCommerce needs time to deliver”, in which we downgraded Singapore Post to Sell, the stock price has corrected by about 8% vs. the STI’s flattish performance. At one point, the stock closed as low as S$1.235, which was on 6 Jun. This is likely attributed to the group’s disappointing FY17 results, Singapore Stock poor performance from TradeGlobal, as well as uncertainty relating to this entity. We highlight that there are other factors to consider (not all negative) for the group going forward.

      Assessing Terminal Dues Impact

      Since 1969, the designated operator that sends a letter-post item to another country remunerates the destination post for processing and delivering that item. This system of remuneration is known as terminal dues; postal rates will increase following changes in the terminal dues systems starting from 1 Jan 2018, and SingPost is still assessing the overall impact of this increase. SingPost has a commercial delivery network, and there may be opportunities for this segment in the logistics division, as some volumes may be channeled over from the international mail.

      SPC Retail Mall – Some Financial Impact Starting Oct

      Currently, most of SingPost’s rental income comes from SingPost Centre’s office space since the retail mall is under development; other key contributors (Singapore Share Market) include the Tanglin Post Office, KPO and a childcare center. Looking ahead, the new SPC mall will open up in phases from Sep this year; FY18 will see six months’ worth of contribution though this is not the full impact from the entire mall.

      Upgrade to HOLD

      Given the share price correction, we upgrade our rating to HOLD, keeping our fair value estimate unchanged at S$1.20. Looking ahead, there are several things to look out for: 1) level of improvement in volumes from the collaboration with Alibaba, 2) results from the review of the TradeGlobal acquisition, 3) utilization levels at the new e-commerce logistics hub and 4) any escalation of losses from the e-commerce division.

      Source - http://sgx.i3investor.com/blogs/sgxstockwarrant/30002.jsp

      Research Partner - MmfSolutions .sg & OCBC Research

      Edited by Gemmie_kirito 26 Jun `17, 5:19PM
  • SBLCleasing's Avatar
    2 posts since Jul '17
  • Ashley.bensonn87's Avatar
    2 posts since Jul '17
  • Sarah Tan's Avatar
    1 post since Jul '17
    • Frasers Logistics & Industrial Trust (FLT) reported its 3QFY17 results which met our expectations. Gross revenue of A$40.2m came in slightly lower by 0.2% than its forecast as disclosed in its IPO Prospectus. However, DPU of 1.75 S cents beat its forecast by 6.7% due largely to lower-than-expected finance costs. FLT’s portfolio occupancy remained high at 99.3%, with a long WALE of 6.7 years, as at 30 Jun 2017. Industry outlook remains firm, and we believe there is room for further compression in prime yields in the near-term, especially for assets which are well-located and backed by long WALEs. 

      Meanwhile, the Reserve Bank of Australia recently provided an upbeat assessment of the economy, citing improvements in labour market conditions, household consumption Growth and Investments

      We believe these trends would benefit the logistics industry, and raise our terminal growth rate assumption for FLT from 1.5% to 2.0%. Consequently, our fair value is bumped up to S$1.22 (previously S$1.14). Reiterate BUY.

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