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5 Useful Things Investors Should Learn About Singapore Post Ltd

Singapore Post Ltd (SGX: C6L) is one of the cool companies which shares webcasts of their quarterly earnings presentations (the link for Singapore Post is here).

The mail service carrier likely needs no introduction, as it should be well known by most Singaporeans. That said, you can still read more about the company in here if you’d like.

What’s the story?

Below are five useful things I learned from watching Singapore Post’s webcast of its fiscal fourth-quarter earnings presentation:

  1. Chief Financial Officer Daniel Phua highlighted a change in the accounting policy for the company’s investment properties; this was a change from a cost model to a fair value model. He attributed the 17% drop in net profit that Singapore Post had suffered in its fiscal year ended 31 March 2015 (FY14/15) to the change in the accounting policy – the prior year had higher fair value gains ($44.5 million) compared to the reporting year ($5.2 million). Along with this, Phua noted that the company’s underlying profit actually rose 5.2% year over year. (Profit growth’s always nice, but I think we should still recognise that this 5.2% increase in underlying profit is still behind the company’s revenue growth rate of 12%.)
  2. Recognising the fair value of underlying assets had the effect of boosting the net asset value of the company. The value of the investment property rose significantly under the fair value model and this was subsequently captured as a rise in the company’s net asset value per share (68.4 cents using fair value model vs. 48.5 cents using cost model). This is summarized in the slide below:
    Singapore Post valuation tableSource: Singapore Post earnings presentation
  3. The majority of Singapore Post’s revenue growth came from its overseas business which grew by 30.8% due to acquisitions and growth from regional markets. This expansion puts Singapore Post’s overseas business revenue at 32.5% of total revenue in FY14/15. Phua added that 90% of the company’s overseas revenue comes from its logistics business, or more specifically, its stakes in Famous Holdings and Quantium Solutions. Famous Holdings and Quantium Solutions had enjoyed 110% and 89% spikes in revenue, respectively, for the year.
  4. Singapore Post remains committed to its transformation. On that count, it is mainly focusing on productivity and service improvements in its mail division. This is in contrast to Singapore Post’s eCommerce-related revenue, which grew to make up 28% of total revenue in FY14/15. Singapore Post currently has over 1,000 eCommerce customers, which include Muji, Xiaomi, Toshiba, Triumph, Levis, Rakuten, Philips and Adidas. Singapore Post has 19 warehouses in the Asia Pacific region and 100 POP stations (pickup stations) in Singapore. The company plans to have 200 POPstations islandwide.
  5. Chief Executive Officer Wolfgang Baier also cited the acquisition by Quantium Solutions of Courier Please as a major purchase which adds a last mile capability to Singapore Post.

Foolish takeaway

To buy and hold a company’s shares for the long term also means keeping up with developments in the firm.

The access to management teams via webcast gives the Foolish investor a fair chance to judge for themselves on whether they would like to be invested alongside those teams. It also helps us put together a more complete thesis around a company and keep up with developments in its industry.

For more (free!) stock analyses and investing tips, sign up here for your FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.