MAYBANK Securities has initiated coverage on Singapore Post (SingPost) with a “buy” call and a S$0.74 target price after applying a 15 per cent holding discount to its sum-of-the-parts valuation of the group at S$0.86 per share.
In a report on Monday (Nov 25), analyst Jarick Seet said he viewed the group as “deeply undervalued” considering its current net assets which could result in higher profitability and dividends if the group should decide to sell them over the next few years.
Based on SingPost’s recent share price levels, the stock is trading at around 15.8 times based on FY2026 estimates, which Seet highlighted to be below its global peers’ average of 19.8 times.
In particular, the analyst said he sees significant value in SingPost’s potential sale of Famous Holdings and its Australian business, as well as SingPost Centre and post offices over the next one to two years.
The expected sale of its freight-forwarding business could also generate about S$900 million to S$1.1 billion of proceeds, noted the analyst, who said that this would “significantly reduce finance costs and bump up future profitability” for the group.
Earlier in June this year, SingPost and SMRT’s business arm, Stellar Lifestyle, announced launching a postal collection pilot project as part of their memorandum of understanding to explore deploying more postal service points near MRT stations.
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Seet further speculated that SingPost could reduce its post office locations to further lower costs amid the ongoing review of its operating model.
A merger between the group’s SingPost centre mailing services and its logistics centre at Tampines Logistics Park could also result in the closure of SingPost centre, which Seet estimates to be valued at around S$1.2 billion.
“As a result, any of these asset sales will bring in significant cash returns to shareholders and also increase profitability if debt was pared down,” added the analyst.
As at 11.41am on Monday, shares of SingPost were trading at S$0.01 or 1.9 per cent higher at S$0.545.
