If one sold SingPost in May and buy back now  ... one made 16 cents ( 16% ).... instead of the 1.25 cents dividend and compare with 5.5% annual yield ...My personal opinion ...

viruz7667      ( Date: 03-May-2008 15:17) Posted: Singapore Post May 2 close: S$1.15 DBS Group Research, May 2 UNDERLYING Q4 FY2008 net profit of $33.6 million (down 1.2 per cent y-o-y, and 8.0 per cent lower q-o-q) was below our $35 million forecast, as a 13 per cent y-o-y increase in operating expenses (excluding an impairment charge of $4.9 million) was above our already high single-digit growth estimate. The company declared a final dividend of 2.5 cents, taking full-year dividends to 6.25 cents. Operating expenses grew mainly due to: 1) rising wages; 2) higher traffic volume coupled with higher oil prices; and 3) higher selling expenses for boosting retail sales. Management has guided for stabilisation of operating costs at Q4 FY2008 levels, which means that Q1 FY2009 and Q2 FY2009 could be hit by a high cost base compared to the corresponding quarters in FY2008. Moreover, postal liberalisation, although not very significant, can put additional pressure on Singapore Post's margins. We have trimmed our FY2009 earnings estimates by 6.5 per cent on lower margin assumptions. In view of an uncertain property market, sum-of-the- parts valuation based on the assumed sale of the SPC building may be less relevant now. Our new target price of $1.12 is pegged at 15 times FY2009 PE (based on a historical range of 15-18 times), and we downgrade Singapore Post to 'hold'. Stable earnings with a 5.5 per cent dividend yield remain as key attractions of the stock. HOLD

But full-year net earnings rise 6.8% to $149.3m

By JOANNE CHIEW

	Email this article
	Print article
	Feedback

Mr Tan: 'We will continue to implement strategies to drive revenue in our core business of mail and logistics and also continue to leverage on our retail network.'

But for the full year ended March 31, net profit climbed 6.8 per cent to $149.3 million, with revenue up 8.4 per cent at $472.6 million. Q4 earnings per share fell to 1.793 cents from 2.014 cents.

What caused the Q4 fall in net profit was an 18.4 per cent or about $14.5 million jump in total expenses to almost $93 million. Besides the higher costs of labour, goods and administrative expenses, the period included a one-off impairment charge of $4.9 million for two properties.

The increase in full-year revenue was due to all business segments showing improvement.

Full-year mail revenue grew by 7.9 per cent to $365.3 million, underpinned by higher mail volumes and price adjustments.

Logistics revenue rose by 6.7 per cent to $68.6 million due to higher contributions from Speedpost, vPOST online shopping and shipping transactions, and warehousing, fulfilment and distribution.

Retail recorded a 10.8 per cent increase in revenue to $61.6 million, as increased contributions from financial services and retail products offset the decline in agency and bill presentment services.

Said Wilson Tan, SingPost's group chief executive officer: 'We will focus on enhancing productivity and efficiency to better support our business growth. Barring any significant changes, we expect operating costs to stabilise.'

SingPost has proposed a final dividend of 2.5 cents per share (tax exempt one-tier), unchanged from the previous Q4. This is to be paid on July 18.

Together with the interim dividends of 1.25 cents paid out for each of the first three quarters, the total dividend for the year will total 6.25 cents per share.

As part of its efforts to cater to consumers' needs, SingPost is looking into expanding its services and reach.

DMrocket, a one-stop direct mail centre, was launched during the year. SingPost also expanded its hybrid mail business into Hong Kong and Thailand.

It also launched two new remittance services - Visa money Transfer and Cashome to Indonesia and an investment fund with Prudential Asset Management.

Despite the fall in Q4 net profit, SingPost remains upbeat about its outlook.

'We will continue to implement strategies to drive revenue in our core business of mail and logistics and also continue to leverage on our retail network. We are re-purposing our post offices to reap better yield,' said Mr Tan.

'We believe the group is positioned to tackle the challenges ahead and also on track for continued growth.'

SingPost shares closed 0.9 per cent higher at $1.16 yesterday.