Singapore Post Limited’s Management Describes The Company’s Future In Logistics

Singapore Post Limited  (SGX: S08) recorded revenue growth of over 22% in the second quarter of its fiscal year ending 31 March 2016 (FY2016/17). This is summarised in the graph below:

Source: Singapore Post earnings presentation

But when we dig a little deeper, we begin to see a different picture.

eCommerce sales accounted for almost all of the growth in the second quarter of FY2016/17. Furthermore, we can see that the eCommerce and Logistics segments have grown to represent the majority of Singapore Post’s revenue. As such, how these segments evolve could be important for the future of Singapore Post.

Sam Ang, the chief executive for Quantium Solutions and Famous Holdings, is leading the charge in the Logistics segment. The aforementioned entities are subsidiaries of Singapore Post and fall under the Logistics segment.

For more background, the majority of the Logistics segment’s revenue is from Quantium Solutions (regional logistics provider), Famous Holdings (freight forwarding services), Couriers Please (parcel delivery and POPStation parcel lockers), and SP Parcels (parcel delivery).

Ang was promoted in July. During Singapore Post’s recent second quarter earnings briefing, he shared what he has been up to since taking on the new appointment:

“Well, the first thing that I’ve done…what we do is to connect all the various parts of our end-to-end logistics flow, for example, from line haul which is the Famous or the freight portion to the order fulfilment, warehousing, pick and pack which is the Quantium Solutions and the last-mile delivery, which is the SpeedPost and SP Parcels part of it.

So the end-to-end process includes Couriers Please in Australia, so it’s the end-to-end process.”

The goal, according to Ang, is to provide a hybrid solution for postal and freight and be able to provide customers with a wide range of solutions. Ang believes this could put Singapore Post in an advantageous position,:

“And as I said, there are many competitors in the market, either very good in the postal part or majority of them will be on the commercial part of it…and that’s where our niche is to offer both solutions, comprehensive solutions to the e-retailers, to our customers.”

So, will Singapore Post be able to build a sustainable stream of new businesses in the future? Investors will have to continue watching developments in the company’s businesses and how its financials perform over the next few years.

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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.