• 3QFY14 results in line
• 1.25 S-cents interim dividend
• Unchanged FV estimate

3QFY14 results in line

Singapore Post (SingPost) reported 3QFY14 PATMI of S$39.4m which was flat YoY (-0.2%). 9MFY14 PATMI now cumulates to S$112.3m, constituting 76.0% of our full year forecast and we judge this to be mostly in line with expectations. In terms of the topline, 3QFY14 revenue grew 30.2% YoY to S$222.6m, up from S$171.0m in 3QFY13, mainly due to contributions from acquisitions and an increase in e-Commerce activities. Net flow generated by operating activities remained healthy at S$40.2m in 3QFY14 versus S$39.8m generated in 3QFY13. We note that total expense growth in 3QFY14 rose at a rate (up 34.4%) marginally above that of revenue (30.2%) due to increased exposure to lower net margins businesses.

Domestic mail volume decline for the 8th consecutive quarter

Domestic mail volume declined for the eighth consecutive quarter but including ecommerce packages overall mail revenue for 3QFY14 grew 12.8% YoY to S$133.2m. Revenue from the logistics business was boosted by contributions from two acquisitions, General Storage Company and Famous Holdings (acquired Jan-13 and Feb-13, respectively), and grew 64.5% YoY to S$101.2m. Excluding contributions from these two acquisitions, however, logistics revenues grew 4.3% YoY. For the Retail and e-commerce segment, 3QFY14 revenue dipped 6.1% YoY to S$22.6m as contributions from agency services declined. Rental and property-related income for the quarter held steady and increased 1.9% YoY to S$11.4m.

Steady yield play

In line with its usual practice, the group has proposed an interim quarterly dividend of 1.25 S-cents/share. We continue to like SingPost’s consistent dividend policy which is backed by stable operating cash flows, but see few re-rating catalysts for now. Maintain HOLD with an unchanged S$1.32 fair value estimate.

Source: OCBC Research - 6 Feb 2014