A Close Look At Singapore Post Limited’s Growth, Dividend, And Valuation

Logistics and postal services provider Singapore Post Limited (SGX: S08) has been a relatively decent performer in Singapore’s stock market over the past five years – its shares are up by 43%. In contrast, the Straits Times Index (SGX: ^STI) has moved up by just 6.6% in the same time frame.

Here are three important aspects about Singapore Post that may interest investors, namely, its growth, dividend, and valuation.

1. Growth

The following table shows how Singapore Post’s revenue and earnings per share have changed over its last five completed fiscal years:

Source: S&P Global Market Intelligence

From FY2012 (fiscal year ended 31 March 2012) to FY2016, Singapore Post has seen its revenue jump by 92%. Earnings per share, meanwhile, has grown by 47%.

It should be noted that Singapore Post’s bottom-line of S$249 million in fiscal 2016 had benefitted from one-off sales of subsidiaries, associates, and investments, which total S$112.1 million.

2. Dividend

At Singapore Post’s current share price of S$1.455, it has a dividend yield of 4.8% thanks to its trailing dividend of S$0.07 per share. This yield is higher than the market average, as represented by the SPDR STI ETF (SGX: ES3). The SPDR STI ETF has a yield of 3.2% and is an exchange-traded fund that tracks the fundamentals of the market benchmark, the Straits Times Index (SGX: ^STI).

We can also try and assess the sustainability of the company’s dividend by looking at two financial ratios: the debt-to-shareholders’ equity ratio and the pay-out ratio. But, do bear in mind that there are many other things to look at beyond the two ratios.

The debt-to-shareholders’ equity ratio is a gauge for the level of financial risk a company is taking on. Meanwhile, the pay-out ratio is the percentage of a company’s profit that is paid out as a dividend. Generally speaking, the lower the two ratios are, the better it could be.

Singapore Post’s trailing earnings of S$0.103 per share give it a pay-out ratio of 68%. Based on its latest financials (as of 30 June 2016), the company has a debt-to-shareholders’ equity ratio of 23%.

3. Valuation

Singapore Post’s earnings per share and share price are already known. Putting the two numbers together give us a price-to-earnings (PE) ratio of 14. There are two things to note about this figure.

First, Singapore Post’s current PE ratio is near a five-year low, as shown in the chart below:

Source: S&P Global Market Intelligence

Second, the logistics and postal services company’s valuation is slightly higher than the SPDR STI ETF’s PE ratio of 12.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.