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11 Quick Things Investors Should Learn About Singapore Post Limited

Singapore Post Limited (SGX: S08) is one of the cool companies in Singapore that shares webcasts and/or transcripts of their earnings presentations (the link for Singpost is here).

As a quick introduction, Singapore Post is primarily in the business of providing mail and logistics services. Most Singaporeans should be familiar with the company’s namesake mail service. Its business is currently organized into three major segments: Mail, Logistics, and Retail & eCommerce.

You can read more about the company in here.

Posting growth?

Below are 11 useful things I learned from listening to the webcast of the presentation for Singapore Post’s third-quarter earnings for its financial year ending 31 March 2016 (FY15/16):

  1. Chief Financial Officer and Deputy Chief Executive Officer, Mervyn Lim, highlighted a few key points for the quarter. Firstly, eCommerce-related revenue rose 53% to $278.1 million for the first nine months of FY15/16. Lim noted that eCommerce-related revenues now make up 33.4% of Singapore Post’s total revenue, up from 27.1% in the previous year. In a related point, Lim also highlighted the benefits of scale – he noted that the Logistic segment’s operating profit margin had increased to 7.5%, up from 5.7% previously.
  2. Total expenses at Singapore Post grew 37.9% year-on-year, increasing at a faster rate than revenue growth, which clocked in at 32% in the reporting quarter. The higher expenses were due to Singapore Post’s continued investment in transforming itself into a regional leader in eCommerce logistics.
  3. As I noted in a previous article, Singapore Post had a net debt position of $176 million as of 31 December 2015. The mail service outfit spent $463.9 million in cash flow for investing activities in the first nine months of FY15/16, with the bulk of it going to the acquisition of TradeGlobal and $230 million in capital expenditure for the construction for the eCommerce Logistics Hub and SPC Retail Mall. The company’s EBITDA (earnings before interest, taxes, depreciation and amortization) to interest expense remained comfortable at 36.4 times.
  4. Singapore Post’s eCommerce-related revenue is made up of different portions, namely, Retail & eCommerce, Mail, and Logistics. Of the total of $278.1 million in eCommere-related revenue recorded in the first nine months of FY15/16, $55.1 million came from Retail & eCommerce, $117.1 million from Mail, and $105.9 million in Logistics.
  5. Meanwhile, Singapore Post is also growing internationally. The company posted (pun intended) overseas revenue of $349.1 million for the first nine months of FY15/16. Overseas revenue now makes up nearly 42% of overall revenue, with much of it coming from its Quantium Solutions, Famous Holdings, and newly acquired TradeGlobal sub-segments.
  6. Positive but tiny revenue growth in the company’s Mail segment in the quarter came from heady growth in its International mail sub-segment, which grew by 20% year-on-year. This strong growth offset the loss of the company’s hybrid mail sub-segment’s revenue. The International mail sub-segment was buoyed by higher cross border eCommerce volumes during its peak season. Lim also stated that Singapore Post is benefitting from its collaboration with Chinese eCommerce bigwig AliBaba.
  7. Quantium Solutions and Famous Holdings were the star performers in the Logistic segment for the reporting quarter. The former saw revenue jump by 54.1% year-on-year while the latter enjoyed a 22.5% revenue increase.
  8. Finally, TradeGlobal accounted for majority of the revenue spike at the Retail & eCommerce segment. This latest acquisition by Singapore Post added $29.4 million in revenue for the reporting quarter.
  9. Lim rounded out the presentation with an introduction of the company’s key players in its eCommerce efforts. Marcelo Wesseler, Chief Executive Officer for SP eCommerce, leads the charge for Singapore Post’s eCommerce service. Dr Sascha Hower, also Singapore Post’s Chief Operating Officer, acts as the lead for its warehousing and fulfillment services. Elsewhere, Woo Keng Leong, Chief Executive Officer for Postal Services, takes charge of the last-mile delivery and returns. Finally, Goh Hui Ling deals with freight, customs, and regulation management. Lim, on the hand, is overseeing post-merger integrations.
  10. Lim also took time to talk about SP Commerce, which brought together SP eCommerce, TradeGlobal, and Jagged Peak under one umbrella as of January 2016. The combined entity offers global eCommerce logistics solutions which covers 18 countries including the United States and China. It also manages the end-to-end solutions for well-known brands such as Adidas, Calvin Klein and Muji. It boasts more than 50 fulfillment centres globally and manages a gross merchandise volume of US$3 billion annually.
  11. As a final note, Lim said that Singapore Post will be concentrating on consolidating and integrating the network of companies that it has put in place. This is expected to take place over the next few quarters. This could be a signal that the company is taking a break from its acquisition binge.

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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.