Apr[2] - SingPost (BUY<$2; Proxy of regional e-comm logistic hub)

COUNTER: Singapore Post

BUSINESS:

The well known counter is running national postal service.  It provides domestic and international postal and courier services. It also offers end-to-end e-commerce logistic solutions.

OVERVIEW:

The counter has been facing increasingly competition in his traditional business. In the last quarter, domestic mail revenue fell 1.7% year on year while international mail revenue declined 2.7%. To continue its growth strategy, it has been expanding its end-to-end e-commerce logistics solutions network in the region and investing in e-commerce logistics infrastructure, technology and capabilities. 

On mid 2014, e-commerce giant, Alibaba bought ~10% stake into Singapore Post. Subsequently, the counter announced $182m plan to develop 3-storey logistic hub in in Tampines. Coming to early this year, it has announced new partnership with POS Indonesia and joint venure with PT Telekomsel, a leading distributor and retailer of mobile phones in Indonesia. All these steps are deployment as future regional e-commercial logistic hub.

Besides, Singapore Post has plan to improve its retail income from its center as well.

REASONS TO BUY:

The counter has stable income over the years. Its annual dividend yield is ~3% at current price. Due to its cash rich position, investor shouldn't be worried over any interest rate hike in near term.

Looking into potential grow of Alibaba e-commerce business in South East Asia, investor could take Singapore Post as the proxy into it. The potential profit is expected to be fully realized on 2016.

ENTRY PRICE:

The counter has been building foundation ~1.95 over last few months. Most of the broker firms have rated this counter at >2.15. So it is worth to accumulate <$2.