OVERVIEW:
The well known local 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.
HIGHLIGHTS:
[1] Latest result saw 1H2015 revenue leaping 20% year on year. Major contribution came from logistic segment due to its aggressive acquisition and growth in eCommerce related business.
[2] Its traditional business in mail segment dropped 2% but net profit improve >5% because of improvement in mail infrastructure which brought higher productivity and efficiency. Total underlying net profit up 1.4%
[3] The counter has announced a series of business acquisition. Recent ones include TradeGlobal and Jagged Peak. Both are US based eCommerce provider. It is also going to redevelop its existing center into Singapore's first retail mall with eCommerce services. It is estimated to be completed by mid 2017.
INVESTMENT THEMES:
[1] The counter is transforming its business base from declining postal services to booming eCommerce logistic. It has been a happening year with few exciting aggressive plans being announced and executed. Higher attention will be paid into FY2016. Investor shall take position during execution phase which is now.
[2] Alibaba is currently holding ~10% of shares into the counter. It will subscribe another 5% with long stop dated on Feb 2016. The management indicated that it is pending for regulatory approval.
[3] The counter has been consistently giving dividend quarterly with total ~0.07 per share. Interest coverage is still healthy at 40.6 thus less subjective to rate hike risk.
ENTRY PRICE:
Last month, the counter surged in price since a series of announcement about new business acquisition which strengthened its ambition into eCommerce sector. Since dividend released last week, it has been retreating to support price ~1.8, which represents ~ 3.8 to 4% dividend yield. Buying window is present again.
*** Note: Same counter has been mentioned in Apr[2] ***
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