January 10, 2018

2017 has been a mixed bag for Singapore Post (SingPost). At the start of last year, the group completed the issuance of 107.6m shares to Alibaba, who now holds about a 14.5% stake in SingPost. During its 3QFY17 results in Feb, it was disclosed that TradeGlobal, which was acquired earlier, had not achieved the underlying profit assumptions of the business plan which supported the investment. In Oct, SingPost officially launched the redeveloped SingPost Centre, which will support rental income. Looking ahead, we expect a gradual ramp-up in utilization rates of the log hub, but the environment for logistics as a whole is likely to remain challenging. We look forward to positive results from the execution of the group’s targets from its recent strategic review, which should drive earnings and ultimately the stock price. Meanwhile, we maintain our HOLD rating and S$1.26 fair value estimate by OCBC Investment Research. Share price closed at S$1.240