CIMB has kept its ‘add’ call on $1.89 target price SingPost, following the recent decline in share price.
“We think SingPost’s share price has been overly punished and deserves to trade up to higher valuations on earnings delivery in ecommerce logistics,” writes analyst Jessalynn Chen in her March 11 note.
Investors have been concerned over declining mail volumes, growing debt as well as competition from start-ups. “We think these are overplayed,” writes Chen.
Rather, she suggests that investors take a closer look at possible catalysts driving SingPost.
They include tighter collaboration with strategic shareholder Alibaba, better operational efficiency, as well as SingPost’s growing customer roster of so-called “monobrands” such as fashion retailers that have come on board the ecommerce bandwagon.
In addition, Chen sees US, the world’s largest consumer market, as an area with big potential for SingPost to flex. It already has more than 50 fulfilment centres there.
She expects SingPost to see a 48% CAGR in ecommerce-related revenue in FY15-17, up from 19% y-o-y in FY15. Ecommerce is seen to become the company’s leading revenue contributor, with 43% of total revenue come FY17, up from 28% in FY15.
Furthermore, with volume growth comes margin expansion, she adds.
Lastly, SingPost, a long-time favourite of dividend hunters, is seen to yield a decent 4.4%.
At 9.54am, SingPost was down half cent at $1.595.
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“We think SingPost’s share price has been overly punished and deserves to trade up to higher valuations on earnings delivery in ecommerce logistics,” writes analyst Jessalynn Chen in her March 11 note.
Investors have been concerned over declining mail volumes, growing debt as well as competition from start-ups. “We think these are overplayed,” writes Chen.
Rather, she suggests that investors take a closer look at possible catalysts driving SingPost.
They include tighter collaboration with strategic shareholder Alibaba, better operational efficiency, as well as SingPost’s growing customer roster of so-called “monobrands” such as fashion retailers that have come on board the ecommerce bandwagon.
In addition, Chen sees US, the world’s largest consumer market, as an area with big potential for SingPost to flex. It already has more than 50 fulfilment centres there.
She expects SingPost to see a 48% CAGR in ecommerce-related revenue in FY15-17, up from 19% y-o-y in FY15. Ecommerce is seen to become the company’s leading revenue contributor, with 43% of total revenue come FY17, up from 28% in FY15.
Furthermore, with volume growth comes margin expansion, she adds.
Lastly, SingPost, a long-time favourite of dividend hunters, is seen to yield a decent 4.4%.
At 9.54am, SingPost was down half cent at $1.595.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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