Singapore Post Limited (SGX: S08), or SingPost, delivered some cheers for the second quarter of 2013 (2Q 2013). It announced a revenue rise of 32.6% to S$203.8 million, as compared to the previous year. The increase was mainly due to the rise in logistics revenue of 79.1% to S$94.6 million. Revenue from the mail business grew 13.4% to S$119.7 million and revenue from retail and e-commerce business rose 4.7% to S$21.3 million.
The net profit grew 8.5% to S$35.6 million for 2Q 2013 due to the stronger business performance. The net profit margin is at 17.5%. In the previous year, the margin was at 21.4%. The margins dropped as the total expenses for 3Q 2013 grew 34.9%. However, SingPost’s margin is much better than that of CWT Limited (SGX: C14), a logistics company. CWT managed a net profit margin of only 1.05% for its latest quarter.
On the balance sheet, as of 30th September 2013, SingPost carries a total debt of S$228.1 million but it is in a net cash position of S$139.1 million.
For this quarter, the company generated S$117.9 million in cash flow from operations as compared to S$99.8 million generated in the previous year.
Dr Wolfgang Baier, Group Chief Executive Officer of SingPost, said, “SingPost remains fully committed to serve its domestic customers well. We have committed S$100 million to enhance our postal infrastructure, service quality and income of our postal workers. About 60% of this investment is dedicated to improvements for the postal business including the upgrading of our mail sorting machines and refreshing of our post office network.”
Indeed, SingPost is upping the number of POPStations (“Pick Own Parcel” smart parcel stations) islandwide, following the successful pilot launch in April 2013. With POPStations, customers are able to pick up their parcels 24/7 and at their convenience, drastically reducing the waiting time for delivery. SingPost targets to have more than 100 POPStations island-wide by the end of next year.
Regarding the e-Commerce front, Dr Baier said, “With the fast-growing e-Commerce market in Asia, businesses from Europe and America are looking to tap the huge market potential here. SingPost knows the Asian terrain, has access through its postal networks and regional set-up, as well as end-to-end low cost e-Commerce logistics solutions for them. We have built up a complete and integrated infrastructure/service offerings covering four key areas: freight transportation (through Famous Holdings and Quantium Solutions), warehousing & fulfilment (with 12 warehouses in the region and regional partners), last mile delivery & returns capability (through a postal network spanning 220 countries/territories) and front-end web solutions (content management, digital marketing, payment solutions, customer service etc).”
SingPost, for the past ten years, has delivered tremendous shareholder value. It has triumphed the Straits Times Index (SGX: ^STI) by a wide margin of 102.3% since May 2003. It has also been a consistent dividend payer of 6.25 Singapore cents per ordinary share yearly since 2007.
For this quarter, shareholders will, as usual, receive an interim quarterly dividend of 1.25 Singapore cents per ordinary share. The shares of the company closed at $1.30 on Wednesday. SingPost is trading at a historical PE ratio of 18 and the dividend yield is at 4.8%.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.