Singpost Is Going To Reach Its 52-Week High. Is It Worth A Second Look?

Over the past month, the Straits Times Index (SGX: ^STI) has dipped around 4.3% in tandem with the slip in stock markets around the globe. Of course, this doesn’t mean that all stocks will follow the broad market sentiment. In fact, there’s one particular share which has advanced more than 100% since January 2012. At its current price of S$1.885, it’s also just a whisker away from its 52-week high of S$1.925.

Folks, meet Singapore Post Limited (SGX: S08), Singpost for short.

With its heritage dating all the way back to the founding of Singapore by Sir Stamford Raffles in 1819, Singpost is still known as the only trusted mail provider in Singapore today. Even so, it has expanded to 3 main business segments: namely Mail, Logistics and Retail businesses.

During the past few years, Singpost has been battered with declining mail volumes and low margins as more people hop on to the internet, phasing off the need for physical mails. Nevertheless, since the appointment of Dr. Wolfgang Baier as CEO of Singpost in October 2011, Singpost has been given a face-lift.

Banking on several growth channels

  • In a bid to transform into a regional leader in the area of e-commerce, the company has made several acquisitions and plan to continue doing so. The move seemed to work, as its e-commerce-related revenue now accounts for 26% of its total revenue.
  • Singpost’s recent high-profile partnership with Chinese e-commerce titan Alibaba have shown on several investors’ radars. With both their interests aligned in the e-commerce sector, it may well open up new doors for strategic collaboration in the future.
  • Gone are the days where people queue up to pay their bills in Singpost’s post office. With SingPost’s “new generation” post office at Suntec City, they can prepare mailing labels of their own on an ezy2ship kiosk, or pick up or return parcels around the clock at POPStations. Furthermore, they can try out the innovative 3D printing service.
  • Lastly, despite the quest to ramp up e-commerce offerings, the management has not forgotten about its bread-and-butter business. To tackle rising costs and declining mail volumes, Singpost has managed to seek approval for the revision of postal rates.

Foolish Takeaway

Investors may be excited to probably witness an overhaul in Singpost’s businesses to become an e-commerce player in the future, ideally supported by its stable cash flows from the mail business. It is important to note that improvement projects are still in the early stages, and more needs to be done to significantly contribute to SingPost’s bottom-line.

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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 James Yeo doesn’t own shares in any companies mentioned.