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Singapore Post Limited’s Management Talks About Ali Baba, Corporate Governance and Federated Lockers

Singapore Post Limited (SGX: S08) held its fiscal second quarter earnings briefing in October this year. There were a good number of topics that the company’s management covered.

Here are three areas that might interest investors.

On Ali Baba

China-based eCommerce giant Ali Baba has officially taken a larger stake in Singapore Post. Mervyn Lim, Singapore Post’s covering chief executive and chief financial officer, reported:

“On 27 October, Alibaba completed the investment of S$86.2 million for a 34% stake in QSI [Quantium Solutions], with SingPost owning the remaining 66%. QSI will be a common platform to grow and enhance eCommerce logistics capabilities in Southeast Asia and Oceania, to better serve the region’s rapidly growing online retail markets.

Funds will be used to strengthen QSI’s end-to-end eCommerce logistics network, building scale for future profitability.”

Quantium Solutions is a subsidiary of Singapore Post. Elsewhere, Ali Baba will also be taking a bigger stake in the overall group. Lim added:

“Further, approval from the Info-communications Media Development Authority has been obtained for Alibaba to increase its interest in SingPost to 14.4%, from 10.2% currently.

Alibaba’s further 4 investment of S$187.1 million into SingPost is targeted to be completed by 28 February 2017, in light of the timeline required to obtain the remaining approvals from SingPost’s shareholders and from the Singapore Exchange  (SGX: S68).”

In all, it’s clear that Ali Baba has significantly deepened its business relationship with Singapore Post.

On corporate governance

Singapore Post had previously acknowledged that its reputation has taken a beating due to questions raised about its corporate governance. A special audit was conducted and the firm had pledged to implement the auditor’s recommendations by September this year.

During the briefing, Lim gave an update on the progress:

“SingPost has substantially implemented recommendations of the CG [corporate governance] review.

To enhance financial governance, the ExCo is reconstituted as a Finance and Investment Committee. Other key implementations include adopting a Mergers and Acquisition Policy, adopting a Market Disclosure Policy and forming a Market Disclosure Committee.

To bring broader perspective and diversity, three new Non-Executive, Independent Directors, namely Mrs Fang Ai Lian, Ms Elizabeth Kong and Mr Bob Tan, were appointed to the Board on 10 Oct 2016 as part of the implementations of the CG recommendations. SingPost now has 11 Directors, seven of whom are Independent.”

On a separate note, Singapore Post also said that it expects to hire a new group chief executive by the end of this calendar year.

On federated lockers

Singapore will be rolling out a nationwide federated locker system next year.

The initiative is expected to ease the “last mile” delivery problem and reduce the number of delivery vehicles on the road. Deputy Prime Minister Tharman Shanmugaratnam said that goods delivery can take up to a third of peak hour traffic.

Sam Ang, chief executive for Quantium Solutions and Famous Holdings, added his thoughts on the federated locker system. Famous Holdings is also a subsidiary of Singapore Post. Ang said:

“…our POPStation network strategy is aligned with the government’s plan to launch the federated lockers, so we started this way ahead of the market since 2005.

Basically, what we are doing is we are putting out a plan to work with the government on how to manage the federated lockers; whether in what shapes and forms is still early days, but we are working a very thorough plan to ensure that we are part of this federated lockers community, so to speak.”

It looks like Singapore Post has been and will be playing a big part in the roll out of the locker system. Investors will have to see how this contributes to the company’s revenue and 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. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.