The very public firing of three top Singapore Post (SingPost) executives was a dramatic episode in what has been a rather jejune year for the Singapore market.

 

Former group CEO Vincent Phang, group CFO Vincent Yik, and Li Yu, head of the group&rsquo s international business unit (IBU), were given a nasty early Christmas gift on Dec 22, 2024, when the company announced they were axed over the &ldquo grossly negligent&rdquo manner in which they had handled a whistleblower report and subsequent probes.

 

The whistleblower report claims SingPost&rsquo s IBU made manual entries of certain delivery status codes, which resulted in compensation for the customer involved. In the subsequent weeks, there was a series of to-and-fros between SingPost&rsquo s board and Phang and Yik, who have indicated their determination to contest the firing and welcome external inquiries on this episode.

 

However, analysts say investors ought to &ldquo ignore the noise&rdquo and look forward to special payouts from the divestment of its Australian business, Freight Management Holdings (FMH), and the potential divestment of Famous Holdings. SingPost acquired these assets over the years to build an external wing to compensate for the structural decline in its domestic postal business.

 

To recap, SingPost will sell FMH to private equity firm Pacific Equity Partners for an enterprise value of A$1.02 billion ($638.21 million), receive A$776 million in cash and post an expected one-off gain on disposal of around $312 million upon completion.

 

Around half of the A$776 million cash proceeds would be used to repay its expensive Australian dollar-denominated debt of A$362 million. After accounting for future funding needs, SingPost said that a special dividend would be considered in due course.

 

UOB Kay Hian&rsquo s Llelleythan Tan Yi Rong estimates if the remaining proceeds of A$362 million are paid out, that means around 16 cents per share, which gives a yield of 27%. However, given how SingPost may prioritise the need to fund future growth opportunities, Tan says a more realistic estimate is $100 million, which would result in 4.4 cents per share, translating into a dividend yield of around 8%.

 

Tan expects SingPost to continue its monetisation of non-core assets and businesses in the foreseeable future. &ldquo We also understand that M& As and divestments are board-driven and that the recent change would not alter the group&rsquo s strategy to divest non-core assets.&rdquo

 

With former CEO Phang resigning from SingPost&rsquo s board on Jan 13, the EGM that has to be called for shareholders to give their nod for the divestment of FMH &mdash expected in February &mdash will probably go ahead without significant hiccups, given the fireworks between Phang and the board led by chairman Simon Israel.

 

Another key asset to be divested is SingPost Centre. With interest rates no longer as high, some REITs have developed a bigger appetite for acquisitions. The mall space of SingPost Centre is now managed by CapitaLand, and CapitaLand Integrated Commercial Trust is long believed by market watchers to be the buyer.

 

Jarick Seet of Maybank Securities estimates that if the various key divestments go ahead, SingPost shareholders can potentially receive 86 cents per share in dividends from the proceeds in the coming couple of years.

 

In return for its long-held monopoly postal license here, SingPost has committed to certain levels of service standards, such as delivery deadlines. Given the declining volume but not a corresponding drop in overheads, SingPost, as part of its talks with the regulator Infocomm Media Development Authority (IMDA), could ask for variances in these requirements, and thus function with a lower unit cost.

 

If so, this will give SingPost some breathing room as it focuses on building a new and sustainable business.

 

All eyes now turn to who will be the next key faces of the national postal service provider and whether they can carry out management&rsquo s vision of &ldquo unlocking value for shareholders and delivering agility and sustainable long-term growth as an international logistics enterprise" .

 

Singapore Post (SingPost) has appointed Isaac Mah as its group chief financial officer (CFO) effective Jan 22. Mah was previously the group&rsquo s Australia business, Freight Management Holdings&rsquo CFO. 

 

According to the release, Mah will relocate to Singapore and take guidance from the chairman of the board, Simon Israel. Mah&rsquo s appointment as group CFO was first announced on Dec 22 in accordance with SingPost&rsquo s succession plan. 

 

SingPost on Jan 2 appointed Neo Su Yin as its group COO, a newly created role overseeing the group&rsquo s Singapore and international business units and property. 

 

This follows the &ldquo Parcelgate&rdquo scandal that SingPost has been embroiled in. The company fired three top executives, former group CEO Vincent Phang, group CFO Vincent Yik, and Li Yu, head of the group&rsquo s international business unit (IBU) over their &ldquo grossly negligent&rdquo manner in which they handled a whistle-blower report and subsequent probes.

 

Mah has 197,360 unvested restricted share awards granted under the Singapore Post Restricted Share Plan 2013. Mah has been with SingPost since 2019, when he was appointed Head of Strategic Investments and Investor Relations. 

Sias should call on Singtel to review the performance of SingPost&rsquo s board, and encourage more investors to attend the mail carrier&rsquo s next AGM

 

When Singapore Post (SingPost) said on the evening of Dec 22 that it had sacked three top executives for mishandling internal investigations sparked by whistleblowing reports, I wondered if the story would get a proper airing over the Christmas and New Year period.

 

Three weeks on, the matter is still making headlines.

 

One reason for the sustained interest in what happened is that SingPost operates a key public service with many stakeholders &ndash the government not least among them.

 

Senior Minister of State for Digital Development and Information Tan Kiat How said in Parliament last week that the government is monitoring the situation closely, and that the company has been issued an advisory to uphold proper governance and processes.

 

Another reason SingPost is still being closely watched is that a major value-unlocking programme is underway. Turmoil within its top management ranks could put plans to monetise hundreds of millions of dollars of assets at risk or create a buying opportunity for investors.

 

Over the 12-month period to Dec 22, SingPost shares had chalked up a total return of 20.4 per cent. This was in sharp contrast to their 10-year total return of minus 62.5 per cent.

 

Maybank said in a report last week that SingPost shareholders could receive as much as S$0.86 per share from various asset divestments. The research house has a target price of S$0.77 for the stock.

 

SingPost closed last Friday (Jan 10) at S$0.54, up 0.9 per cent or S$0.005.

 

Perhaps the main reason SingPost is still under the spotlight is that it has simply failed to maintain control of the narrative surrounding the whistleblowing reports, and the disclosures it has made are now being second guessed by market watchers.

 

In particular, SingPost did not seem prepared for the blowback from the three senior staff it fired &ndash chief executive Vincent Phang, chief financial officer Vincent Yik, and chief executive of its international business unit Li Yu.

 

The three of them made statements about SingPost&rsquo s internal investigations that seem at odds with the company&rsquo s own version of events.

 

On Jan 2, the Securities Investors Association (Singapore), or Sias, issued a statement that pointed out some of these discrepancies, and called for an independent professional inquiry.

 

&ldquo Shareholders deserve better, and so does the market if all are to make informed decisions regarding their investments,&rdquo Sias said.

 

Would an independent inquiry be helpful? What could SingPost have done differently?

 

Disclosure shortcomings

Clearly, the misconduct brought to light by the whistleblowing reports does not reflect well on SingPost&rsquo s internal controls and processes. But SingPost did not help itself by keeping silent until last month, and not being more proactive once the cat was out of the bag.

 

The company&rsquo s announcement on Dec 22 did not even state exactly when it received the first whistleblowing report. This had one of my newsroom colleagues scrambling to check if there had been an earlier announcement on the matter.

 

SingPost responded to comments and queries from its stakeholders with another announcement on Dec 29, which included a timeline of events and an explanation for why it had kept the whistleblowing reports under wraps.

 

The company said no public disclosure was made when the first whistleblowing report was received on Jan 17 last year as the report had been submitted in confidence, and the allegations it contained had not been substantiated.

 

An investigation eventually determined the problem was confined to a single client and practices of three employees. The client was informed, and a settlement was hammered out.

 

SingPost said the three errant employees were dismissed in June 2024, and that the client&rsquo s contract was renewed in August 2024.

 

At that juncture, SingPost again decided that no announcement was necessary. It noted that the settlement amount had no material financial impact, and its business with the client was unaffected.

 

As for the misrepresentations made by SingPost&rsquo s management, the timeline showed that investigations took place from May to August last year. SingPost&rsquo s board then deliberated until November, at which point disciplinary proceedings against Phang, Yik and Yu kicked off.

 

SingPost said no announcement was made during the investigation and disciplinary proceedings as no conclusion was reached until the close of business on Dec 20. &ldquo This approach also ensured fairness to the parties involved in the disciplinary process,&rdquo it said.

 

Investors should vote

The way I see it, SingPost should have disclosed the internal wrongdoing uncovered by the whistleblowing reports once the facts had been established. While the company may not have faced immediate material financial risks, the practice of falsifying shipment data to dodge penalties could have damaged its reputation.

 

SingPost should perhaps also have flagged its concerns about its top management earlier. According to the timeline of events, it was evident by Apr 3, 2024, that the three top executives had made representations that contradicted the investigation findings.

 

If this was enough to eventually warrant their sacking, should this information have been kept from investors for some eight months?

 

This brings me to the question of whether an independent inquiry is a good idea.

 

My view is that many small investors would probably like to have more information about this whole affair.

 

Phang and Yik have already stated that they would welcome a public inquiry, and that they are prepared for their full responses to SingPost to be released. This is not surprising, as a public inquiry would be less costly than pursuing their case in the courts.

 

As an investor myself, however, I would much rather see shareholders of public-listed companies hold their boards to account directly.

 

At SingPost&rsquo s last annual general meeting (AGM), barely one billion of its 2.25 billion shares voted on each resolution. Singtel holds 494 million SingPost shares, representing a nearly 22 per cent stake.

 

Instead of pressing for an independent inquiry, perhaps Sias should call on Singtel to review the performance of SingPost&rsquo s board and encourage more investors to attend the company&rsquo s next AGM later this year.

 

Singapore Post&rsquo s (SingPost) former group CEO Vincent Phang and former CFO Vincent Yik has welcomed the Securities Investors Association (Singapore)&rsquo s (SIAS) call for an independent professional inquiry to &ldquo facilitate the determination of the full facts of the case&rdquo .

 

The SIAS, on Jan 2, called for an independent inquiry to look into the circumstances leading to the dismissal of SingPost&rsquo s three key executives. Besides Phang and Yik, SingPost also fired the head of its international operations unit, Li Yu.

 

All three individuals are contesting their termination.

 

In their latest statement, however, Phang and Yik noted that they are &ldquo prepared not to pursue any litigation options&rdquo as they simply want to establish the full facts of the case and re-establish their standing and careers rather than to pursue damages.

 

&ldquo In this regard, we are also prepared for our full responses to the company on the issue, which address all the allegations, to be released to ensure that all relevant facts are made known,&rdquo they added.