Singapore Post - OCBC Investment 2022-11-07: More Time Needed

• SingPost (SGX:S08)'s underlying net profit fell 64.7% y-o-y in 1HFY23.
• Interim dividend fell 64% y-o-y to S$0.0108.
• Growth in the Logistics segment was partly offset by the decline in the PP business.

SingPost's 1HFY23 results missed expectations

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• Despite the increase in revenue, operating profit declined 19.1% y-o-y to S$41.3m while the bottom line turned into a loss of S$9.9m in 1HFY23. Excluding the impact of exceptional items, underlying net profit would have fallen 64.7% y-o-y to S$13.2m. The decline was mainly attributable to weaker performance in the PP segment, higher operating expenses and lower share of profit of associated companies and joint ventures.
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Post & Parcel (PP) segment likely to remain challenging in the near-term

• The Post & Parcel (PP) segment remained weak, although there was some improvement in 2Q over 1Q. Revenue for both international (IPP) and domestic (DPP) business declined by 24.3% and 12.0% in 1HFY23. Operating income reported a loss of S$12.1m in 1HFY23, due to lower revenue and higher operating costs.
• IPP’s revenue was weighed down by air conveyance rates which remained elevated albeit moderating, together with supply chain disruption from Chinese cities lockdown.
• In DPP, PP business continued to decline as expected and domestic eCommerce logistics decreased 24.5% y-o-y in 1HFY23, largely due to a major eCommerce customer who has insourced parts of its logistics.

Logistics segment now makes up SingPost’s largest segment

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Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2022-11-07 SGinvestors.io

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