London, UK, 20 Mai 2024

Edison issues initiation on Singapore Post (S08): Transformation to global logistics player unnoticed

The ongoing transformation of Singapore Post (SingPost) from a post and parcel delivery company into a global logistics operator appears to have slipped under the radar of investors and now offers an opportunity for investors to reassess its potential. We believe expansion into the Australian logistics market offers long-term growth and that historical issues surrounding structural weakness in postal volumes may be resolved by growth in replacement volumes from e-commerce and review of postal services in constructive engagement with the regulator. Implementing the March 2024 strategic review recommendations could help unlock value. We believe there is c 50% upside in the share price.

We believe that SingPost’s non-core assets, which are primarily investment properties located in Singapore, are of a similar value to the company’s entire market capitalisation. Furthermore, we value the company on a sum-of-the-parts basis at S$0.72/share, which implies c 50% upside from the current depressed share price. The strategic review, carried out by Bank of America (BofA), was designed to identify operations and assets within the group that are non-core or underperforming and, as such, could become targets for capital recycling. To this end, post review reinvestment may result in a group that is more focused on growth and potentially better able to unlock value, and thus create further upside potential for investors. 

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