Singapore Post Limited (SGX: S08) is one of the cool companies in Singapore that shares webcasts and/or transcripts of their earnings presentations. There may be useful and important information that investors can learn from the webcasts and transcripts. A few weeks back, Singapore Post had released its latest results for the quarter and fiscal year ended 31 March 2016 (FY15/16). I had spent time watching the webcast of its earnings presentation and came away with nine things that may be important for investors to note. But before I share them, here’s a brief introduction of Singapore Post for some context later….
There may be useful and important information that investors can learn from the webcasts and transcripts. A few weeks back, Singapore Post had released its latest results for the quarter and fiscal year ended 31 March 2016 (FY15/16). I had spent time watching the webcast of its earnings presentation and came away with nine things that may be important for investors to note.
But before I share them, here’s a brief introduction of Singapore Post for some context later. The company is a mail and logistics services provider and its business is organised into three major segments: Mail, Logistics, and Retail & eCommerce.
With that, here are my notes:
- Chief financial officer Mervyn Lim had highlighted a few key points for the year. Singapore Post’s revenue eclipsed the $1 billion dollar mark for FY15/16. Net profit rose over 50%, boosted by one-off gains from divestments. Underlying net profit, though, fell 4.1% to $153.6 million. Underlying net profit was affected by the loss of income from the SPC Mall, which is undergoing redevelopment.
- Lim noted that the traditional Mail segment’s revenue was stable despite the divestment of Novation Solutions and Datapost. He added that the stable performance provides a good foundation for Singapore Post to focus on its eCommerce businesses. As a follow up to his comment, Lim noted that the logistics segment grew sales by 35% due to the rise in eCommerce logistics activities.
- Unfortunately, Singapore Post also saw its expenses growing by 31%. Lim said that this was driven by volume-related expenses and reflects the shift of the business mix towards eCommerce.
- Lim also noted that the operating profit for the pair of Logistics and Retail & eCommerce had risen from $32.6 million in FY14/15 to $40.2 million in FY15/16. Elsewhere, the mail segment’s operating profit held up due to higher international mail volumes and eCommerce-related deliveries. The loss of operating profit from SPC Mall’s redevelopment dragged down overall operating profit.
- Singapore Post had a net debt position of $153.6 million as of 31 March 2016. Its EBITDA (earnings before interest, taxes, depreciation and amortization) to interest expense ratio remained comfortable at 42.1. The net debt to total equity ratio also stood at just 9.8%.
- Singapore Post’s eCommerce-related revenue grew by over 60% to $412.4 million. Geographically, overseas revenue also grew by 69% to over half a billion dollars for FY15/16.
- The Mail segment’s growth came from the International mail sub-segment, which grew by almost 28% year-on-year for the fourth quarter. This strong growth offset the loss of its hybrid mail sub-segment’s revenue. The International mail segment was buoyed by higher cross-border eCommerce-related volumes. Lim also stated that Singapore Post had benefitted from its collaboration with AliBaba.
- Famous Holdings was the star performer in the Logistics segment for the fourth-quarter. The sub-segment enjoyed a 54.7% revenue increase. For the full fiscal year, Famous Holdings and Quantium Solutions each posted revenue gains of 37% and 47% respectively.
- Finally, TradeGlobal and Jagged Peak accounted for the majority of the revenue spike at the Retail & eCommerce segment. The US subsidiaries accounted for more than 80% of the eCommerce revenue.
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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.