Singapore Post - Maybank Research 2024-11-25: Unlocking Intrinsic Value; Initiate With BUY

• We believe SingPost (SGX:S08) is deeply undervalued, and now that management has moved to monetize and streamline its businesses, we see significant potential value from the sale of:
  • - Read this at SGinvestors.io -
  • SingPost Centre and post offices over the next 1-2 years.
• Initiate coverage with BUY with SingPost's target price of S$0.74. Our SOTP-based valuation is S$0.86 per share, and our S$0.74 target price is based on a 15% holding co. discount.

SingPost – Investment Thesis

Asset sales will help boost price discovery

• We believe the main way to unlock shareholder value would be the sale of various SingPost assets. Management is keen to unlock shareholder value and is actively exploring options to sell assets.
  • - Read this at SGinvestors.io -
  • SingPost is also looking to sell its freight-forwarding business (Famous Holdings) which we estimate is worth S$80-100m.
  • Last but not least, management is finalising its operating model with the local authorities to ensure long-term commercial viability of the postal services in Singapore after the asset sales. SingPost has 40-plus post office locations in Singapore. These will be reduced by more than 50%, and will be replaced by touchpoints at MRT stations and supermarkets. This would lower costs and monetize several post offices it does not require. Currently, more than 50% of the post offices are self-owned.
  • In addition, SingPost may also merge the mailing services at SingPost Centre to its logistics centre at Tampines Logistics Park. It can then close the Singpost Centre, which has an estimated market value of around S$1.2b. As a result, any of these asset sales will bring in significant cash returns to shareholders and also increase profitability if debt was pared down.
• Our SOTP-based values the net assets at S$0.87/share, a significant premium to the current SingPost's share price.
• We expect the review of Famous Holdings and the strategic review of its Australian business to be concluded by the end of 2024, which could potentially be a key catalyst to re-rate the stock.

Synergies to drive profitability for its Australia business

• Read more at SGinvestors.io.

Jarick Seet Maybank Research | https://www.maybank.com/ 2024-11-25 SGinvestors.io

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