Singapore Post - UOB Kay Hian 2022-11-04: 1HFY23 Mixed Results, Logistics Outperforms But Dragged By Post & Parcel

• SingPost reported strong top-line growth (+31.1% y-o-y) but weak operating (-19.1% y-o-y) and net profits (-64.7% y-o-y).
  • The domestic postal segment fell short as e-commerce volumes dropped while the international postal segment continued to see lower volumes.
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  • The property segment benefitted from the relaxation of social distancing measures.
• We maintain HOLD on SingPost with a lower PE-based target price of S$0.52 (S$0.61 previously).

SingPost's 1HFY23 mixed results slightly below expectations.

• For 1HFY23, Singapore Post (SingPost, SGX:S08)'s revenue (+31.1% y-o-y) and operating profit (-19.1% y-o-y) were in line with expectations despite challenging headwinds, accounting for 53% and 67% of our full-year forecasts respectively. The strong growth in revenue was led by a full half-year contribution from FMH (Freight Management Holdings).
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• SingPost declared an interim 1HFY23 dividend of 0.18 cents, at a 30% dividend payout ratio (1HFY22: 0.5 cents). See SingPost's Dividend History.
• Softer volumes as headwinds bite. 2QFY23 volumes for the domestic post & parcel (DPP) segment were lower y-o-y as both e-commerce (-34.6% y-o-y, +7.8% q-o-q) and letter & printed papers fell (-1.5% y-o-y, -1.9% q-o-q). International post & postal (IPP) volumes also moderated (-15.2% y-o-y, +3.7% q-o-q) as sporadic lockdowns persisted in China, coupled with elevated air conveyance costs. Consignment volumes in Australia fell slightly (-3.8% y-o-y, +4.2% q-o-q), as the e-commerce volumes softened, coming off pandemic highs.

Post and Parcel: Softer profitability amid challenging conditions.

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Llelleythan Tan UOB Kay Hian Research | https://research.uobkayhian.com/ 2022-11-04 SGinvestors.io

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