Singpost: Sinking faster than expected

$SINGAPORE POST LIMITED(S08.SI)$

Following the operation warning announcement on 15 Jul 2022, Singpost released its 1Q22 Business Update this morning on 19 Aug 2022. There was some buzz from a local news that a social media influencer sold his HDB and invested S$300,000 into Sinkpost, so I was hoping to see what have I missed in next result. But alas, the result was worse than my expectation.

Revenue increased by 24.7% due to the acquisition of FMH, but Opex increase almost 40%! As such, Operating Profit declined by 46.7%. Post and Parcel business recorded operating losses as revenues declined and operating costs increased. Earlier, Singpost also warned that a major eCommerce customer has insourced part of its own logistics, resulting in lower volumes. This looks very bad on Singpost’s core business.

Moreover, I previously thought that air conveyance rates would improve as Economy reopened, but Singpost said it was still elevated in 1Q and they blamed it on the lockdowns in China. As such, there is no recovery story for Singpost at all.

On the other hand, Singpost’s property business remained stable. Based on FY21, property contributed almost half of the operating profit for Singpost, and most likely even bigger portion of the operating profit this quarter. It feels like Singpost is following SPH footstep to use property to save its declining operations.

Above is my personal opinion on Sinkpost and does not constitute any trade advise. I am very bearish on this company in the sunset industry.

@Daily_Discussion@CaptainTiger@TigerStars