SINGAPORE Post’s (SingPost) board has approved five growth drivers or “strategic thrusts” to be executed over the next three years, including the adoption of a new payout scheme.
This comes as the group on Tuesday (Mar 19) announced that it completed its strategic review, less than a year after it was initiated in May 2023.
The review was led by exclusive financial adviser BofA Securities, and focused on transitioning the group to a logistics business over time.
Firstly, the group will be reorganised into three business units: Singapore, Australia and International. Such a corporate structure “creates flexibility and facilities future optionalities”, it said.
SingPost’s revenue is presently derived from its three business segments of logistics, post and parcel, and property.
Last year, the group posted its first-ever full-year loss for the post and parcel business for FY2023, resulting in a group operating loss of S$15.9 million from an operating profit of S$24.9 million for FY2022.
“Each business unit will have the agility and empowerment to operate in their own markets, to develop market leadership and build on their core capabilities according to their individual strategies,” said the group of its revised corporate structure.
“This provides clarity on the valuation of the individual businesses against comparable market and sector ratings.”
Next, the group targets for each of these business units to generate a spread above the cost of capital.
To do so, it has identified a list of its non-core assets and businesses – including selected properties and various international assets – which may be monetised for capital recycling.
SingPost will also endeavour to pay out 30 to 50 per cent of its underlying net profit from FY2024 to FY2025. It said the board views such a policy as “balanced” in view of the group’s capital requirements and delivering “sustainable returns” to shareholders.
Previously, the group’s dividend policy was based on a payout ratio of 60 to 80 per cent of underlying net profit for each financial year.
SingPost acknowledged in its FY2023 annual report that it did not adhere to this dividend policy range over the last three financial years, due to operating environment challenges and the need to conserve cash for its investment in growth initiatives.
For the financial year ended Mar 31, 2023, the group’s total dividends stood at S$0.0058 per share, comprising a final dividend of S$0.004 per share and an interim dividend of S$0.0018 per share. This represented about 40 per cent of the group’s underlying net profit for FY2023.
The other three “strategic thrusts” identified by the group comprise transforming urban logistics and deliveries in Singapore, achieving scale in Australia, and leveraging its asset-light model and fourth-party logistics platform to serve cross-border customers.
Group chief executive Vincent Phang said the company will focus on executing these new growth drivers to “create market leadership, orientate to growth and generate shareholder value”.
Shares of SingPost closed flat at S$0.38 on Monday.
The group said that its current share price “does not appropriately reflect the intrinsic value of the company”.
Chairman Simon Israel noted that such a gap is “particularly apparent” considering SingPost Centre’s value of about S$1 billion as at end-September 2023, the Australia business, and the group’s overall growth potential.
“Management’s execution of our strategy will unlock value for shareholders and deliver agility and sustainable long-term growth as an international logistics enterprise.”
