3 Things to Like About Singapore Post's (SGX: S08) Latest Earnings
Sudhan P●
Singapore Post Limited (SGX: S08) will be no stranger to Singaporeans.
With a history stretching back over 160 years, the company currently offers e-commerce logistics and mail and logistics solutions in Singapore and around the world.
Earlier this morning, Singapore Post announced its earnings for the half-year ended 30 September 2021 (H1 FY21/22).
Let’s look at the company’s latest financial results, including where it did well and didn’t.
Strong E-Commerce Logistics Growth
Singapore Post breaks down its business into three main segments, and they are:
- Post and Parcel
- Logistics
- Property
The Post and Parcel segment consists of the company’s main postal and parcel delivery business.
This includes domestic post and parcels, international post and parcels, and products and services transacted at over 50 post offices islandwide.
Next, the Logistics segment is involved in freight forwarding and e-commerce logistics.
This includes front-end related e-commerce solutions, warehousing, fulfilment, delivery and other value-added services in Asia Pacific.
Last but not the least, Singapore Post’s Property segment is involved in commercial property rental and the self-storage business. It owns the SingPost Centre Mall at Paya Lebar.
For H1 FY21/22, Singapore Post’s revenue grew 3.3% year-on-year to S$731.4 million.
The increase was due to growth in its domestic post and parcel, logistics and property segments.
However, this growth was partially offset by a reduction in the international post and parcel segment.
Meanwhile, operating profit rose 28.4% to S$51.1 million on the back of solid contributions from the logistics and property segments.
Operating profit from the logistics segment surged 184.4% year-on-year led by strong growth in freight forwarding revenue, which benefitted from higher volume and sea freight rates.
The property segment’s operating profit improved by 13.5% due to lower rental rebates given to tenants and higher receipts from car-park and other charges driven by higher footfall.
With that, Singapore Post’s net profit increased by 13.3% year-on-year to S$35.0 million.
This was largely driven by higher contributions from e-commerce and freight forwarding but partially offset by weaker international post and parcel performance.
International post and parcel continue to be impacted by the ongoing disruption to flight capacity out of Changi Airport due to the COVID-19 pandemic.
Despite the virus’ impact on certain parts of Singapore Post’s business, other parts have benefitted from the pandemic.
For instance, the company’s growth in e-commerce logistics revenue domestically has offset letter mail decline for four consecutive quarters.
E-commerce logistics now accounts for 40% of Singapore Post’s domestic post and parcel revenue, up from 32% last year. The company saw accelerated e-commerce adoption during last year’s circuit breaker period.
As a group, e-commerce related revenue accounted for around 55% of its total revenue in H1 FY21/22.
Singapore Post also enjoys a strong balance sheet with a net cash position of S$165.8 million as of 30 September 2021.
Interim Dividend Maintained
Singapore Post’s board proposed an interim dividend of 0.5 Singapore cent per share, similar to a year back.
The company’s latest dividend is around 30% of H1 FY21/22 underlying net profit of S$37.4 million.
Singapore Post said that it will “continue to adopt a prudent approach in managing cash flows and conserving cash, taking into account the ongoing execution of strategic initiatives”.
Capitalising on Global E-Commerce Growth
Looking ahead, the company said that it’s looking at new e-commerce growth opportunities in Singapore, Australia and the Asia-Pacific region to benefit from the acceleration of e-commerce adoption.
Over in Australia, Singapore Post increased its shareholding in Freight Management Holdings from 28% to 51%.
This will enable the company to “better derive synergies and build scale to further capitalise” on the accelerated e-commerce growth in the country.
Singapore Post aims to build a second home market in Australia.
As the world opens up further, Singapore Post’s international post and parcel business should also gradually recover.
In all, there were more positives than negatives in Singapore Post’s latest financial results.
It would be interesting to see if the postal outfit can sustain its momentum in the years ahead, especially on the e-commerce front.
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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer doesn’t own shares in any companies mentioned.
