There has been speculation among the investing community, given the domestic postal service business&rsquo secular decline &ndash which has weighed on the company&rsquo s bottom line

 

THE question of whether there are plans to nationalise Singapore Post (SingPost) : S08 +4.55%should be posed to the government, said Simon Israel, chairman of the listed national postal service provider.

 

&ldquo You have to ask the government, not me,&rdquo Israel said at a media roundtable on Wednesday (Feb 26).

 

As to the question of possible privatisation, Israel responded: &ldquo But someone has to privatise it, right? There has to be an actor who wants to privatise a company.&rdquo

 

There has been speculation amongst the investing community, given the domestic postal service business&rsquo secular decline &ndash which has weighed on SingPost&rsquo s bottom line.

 

Meanwhile, the company is focused on the upcoming Mar 13 extraordinary general meeting to obtain shareholder approval for the proposed sale of its Australian logistics business Freight Management Holdings (FMH) at an enterprise value of A$1 billion (S$867 million).

 

The sale will generate proceeds of A$775.9 million in cash and an expected gain of S$289.5 million, with part of the gain possibly distributed to shareholders as a special dividend.

 

Levered return on equity is about four times SingPost&rsquo s investment in FMH, Israel highlighted.

 

The divestment, if approved, is part of the board&rsquo s efforts to unlock shareholder value. The chairman pointed out that the sale would bring forward the unlocking of value in FMH, and represents non-taxable capital gains for shareholders.

 

Israel lamented that SingPost&rsquo s stock price has not reflected the value of its Australia business and the latter&rsquo s financial performance since the Singapore group began building up stakes in the business.

 

SingPost took an initial stake of 28 per cent in FMH in December 2020, while the local postal service provider&rsquo s counter was trading at S$0.72.

 

Its share price has been trending down since and hit a low of S$0.38 in March 2024 before rebounding. The counter stood at S$0.58, up 5.5 per cent or S$0.03 as at 3.40 pm on Wednesday, after the mention of a possible special dividend.

 

The FMH group, including Border Express and CouriersPlease, generated A$802.2 million in revenue and A$70.6 million in earnings before interest, tax, depreciation and amortisation for the nine months of FY2025 ended December.

 

While SingPost had set out on a strategic review of the Australia business, it had not intended to sell it until an unsolicited offer came along.

 

If the sale goes through, SingPost will work on resetting its strategy as well as kickstarting the formal process of hunting for a new group chief executive officer.

 

But if shareholders reject the resolution, it would be &ldquo business as usual&rdquo for the Australian business, and SingPost has other options to fund the business.

 

Only after knowing whether the proposed divestment is accepted by shareholders, will SingPost be able to reset its strategy &ndash which would be done in 2025. &ldquo Because obviously it&rsquo s completely different, depending on which way it comes,&rdquo explained Israel.

 

The slate of candidates for group CEO would also hinge on the reset strategy. The candidate could be from outside or within the group, he added.

 

The top position has been vacant since late December when Vincent Phang was shown the door, along with group chief financial officer Vincent Yik, and CEO of SingPost&rsquo s international business unit, Li Yu.

 

Israel pointed out that the board of directors sets the framework for the group CEO and his management team to formulate their strategy.

 

He also confirmed that no lawsuits from the fired trio have been filed against SingPost.

 

The group will continue to invest in the transformation of its Singapore e-commerce logistics &ndash that is the last-mile delivery &ndash and complete an ongoing review of its international cross-border e-commerce logistics business, as the proposed sale of the Australian business gets under way.

 

Israel said the processing capacity of the Singapore business has been maxed out, and SingPost is looking at investing to more than double capacity.

 

He reiterated the intention to divest SingPost Centre at Paya Lebar and other non-core assets.

 

&ldquo But what might change is the phasing and timing around specific assets. Because we now have to rethink which is the right order, et cetera... When you have the right opportunity? Do you then sell it so you&rsquo ve got the funding for that particular opportunity? There were many things to balance.&rdquo

Shareholders to vote on Mar 13 on sale of Australia business

 

SINGAPORE Post (SingPost : S08 +4.55%) said on Wednesday (Feb 26) it will hold an extraordinary general meeting (EGM) to seek shareholders&rsquo approval for the proposed divestment of its Australia business, Freight Management Holdings (FHM).

 

The EGM will be held on Mar 13 at 3.30 pm.

 

&ldquo This EGM provides our shareholders with the opportunity to vote on this important transaction, which we believe will unlock substantial value,&rdquo said SingPost chairman Simon Israel.

 

The transaction represents an enterprise value of A$1.02 billion (S$867 million).

 

From the divestment, the SingPost group expects to receive gross proceeds of about A$775.9 million in cash.

 

The transaction is expected to generate a gain on disposal of around S$289.5 million.

 

The group intends to utilise some of the proceeds to repay borrowings, in particular, its Australian dollar-denominated debt amounting to A$362.1 million as at Sep 30, 2024. The loan was undertaken for the financing of the acquisition of FMH.

 

The board is also considering the payment of a special dividend.

 

Further announcements on the special dividend will be made when the year-end financial statements of the group are released. SingPost&rsquo s financial year will end in March.

 

It added that the board will disclose in due course the amount of the special dividend, and the amount of residual proceeds that would be retained, subject to the outcome of its strategy reset.

 

In July 2023, the board initiated a strategic review of the group&rsquo s portfolio of businesses, with a view to enhancing shareholder returns and ensuring that the SingPost group is appropriately valued.

 

In March 2024, the board outlined its strategic intentions for the businesses. In line with this, it initiated a strategic review specifically for the Australia business to formulate optionalities for the group.

 

Nanofilm Technologies has reported earnings of $7.74 million for the FY2024 ended Dec 31, 2024, up 147% y-o-y. For 2HFY2024, the company reported a 6.5% y-o-y increase in earnings of $11.5 million. 

 

The group says that it typically enjoys significantly better results in the second half of the year, primarily driven by the Advanced Materials business unit (AMBU) and Nanofabrication business unit (NFBU) exposure to the 3C market. 

 

Earnings per share for FY2024 came in at 1.18 cents per share, up from the 0.48 cents reported in the same period a year ago. 

 

The group&rsquo s revenue for FY2024 was $204.3 million, up 15.4% yo-y due to higher revenue in AMBU, NFBU and Sydrogen business unit (SBU). The increase was partially offset by the decrease in revenue from the Industrial Equipment BU (IEBU). 

 

Other operating income was $5.1 million for FY2024, an 18.3% y-o-y decrease due to a decrease in government grants and incentives received from local government, an increase in sundry income of $0.5 million and an exchange gain of $0.7 million for FY2024.

 

In terms of expenses, research & development and engineering expenses decrease due to higher capitalisation of development costs. Selling and distribution expenses increased due to increase in staff cost to accelerate business development and sales efforts. 

 

Administrative expenses increased due to increase in depreciation and amortization expenses, increase in professional fees and staff related costs. Finance costs also increased due to higher interest expenses from long term bank loans drawn down by company&rsquo s subsidiaries in China. 

 

The group&rsquo s gross profit margin maintained steady at 37.1%, as the increase in revenue was offset by higher fixed depreciation and amortisation costs. 

 

Net margin improved to 3.8%. 

 

Cash and cash equivalents stood at $110.2 million as at Dec 31, 2024. 

 

The group has declared a final dividend of 0.33 cents per ordinary share. 

The postal-service provider&rsquo s road map following the sale of its Australian unit would shape the slate of candidates and its final pick of helmsman

 

NATIONAL postal-service provider Singapore Post (SingPost) : S08 0% is facing a slew of challenges. And, without a leader at the helm, it could be tough for the group to navigate its way out of its troubles.

 

SingPost said last week that it would lay off 45 employees &ldquo in the coming months&rdquo in a move to restructure the company amid prolonged macroeconomic challenges, including intense competition.

 

The news came just two weeks after it announced the exit of its Singapore chief executive officer (CEO), Shahrin Abdol Salam.

 

That was the fourth departure among SingPost&rsquo s senior executives in two months.

 

In late December 2024, group CEO Vincent Phang, group chief financial officer (CFO) Vincent Yik, and CEO of international business unit Li Yu, were fired over the alleged negligence in the handling of internal investigations into a whistle-blower&rsquo s report.

 

SingPost has since appointed former Singapore CEO Neo Su Yin in a newly created group chief operating officer (COO) role. Following Shahrin&rsquo s resignation, she will double-hat as Singapore CEO.

 

Meanwhile, SingPost has appointed Isaac Mah as its group CFO. He was formerly CFO of SingPost&rsquo s Australia business, Freight Management Holdings.

 

SingPost said that both Neo and Mah will take guidance from board chairman Simon Israel.

 

SingPost&rsquo s leadership shakeup is especially worrisome against the backdrop of a domestic postal sector that has been languishing as the industry continues its secular decline.

 

The recent high-profile departures would be expected to have created a dent in staff morale. Shahrin joined SingPost only in May last year, and his resignation came hot on the heels of the headlines over the firing of the trio last December.

 

Neo, with her now-enlarged plate, could well handle the impending layoffs and the high-level departures, but noticeably, the mainboard-listed logistics player has yet to find the replacement for the group CEO.

 

More importantly, SingPost has yet to update investors on its strategy to replace the sizable revenue from the impending sale of its top profit contributor &ndash its Australian business.

 

The business generated a profit of S$20.3 million (including discontinued operations that have not been disposed of, and before the deduction of income tax and non-controlling interests) in the first half of FY2025 to September, or 66.1 per cent of the group&rsquo s S$30.7 million for the period.

 

SingPost&rsquo s strategy following the sale of the Australian business would influence the slate of candidates applying for the top role, as well as its choice for the helmsman.

 

Leaders make or break a company. It is why companies painstakingly seek out candidates of high calibre, and investors keenly watch out for succession plans and scrutinise the appointee.

 

Ismail Gafoor, executive chairman, CEO and co-founder of PropNex : OYY +0.88%, was crystal-clear in a recent interview with The Business Times about the qualities that future leaders of the property brokerage should have.

 

For one, the CEO of the real estate agency with a sales force of 13,000 would not be parachuted in, but must have worked his or her way up as an agent.

 

&ldquo If you have never gone through the sales path, you cannot be a CEO. To me, the CEO must have gone through the baptism (of fire) &ndash understanding the sales persons&rsquo pain, struggles, training, the negotiation, so that you can continue to develop strategies and value-add to how we can be more effective,&rdquo he said.

 

Even though he co-founded the brokerage, his children would not be able to take over the reins from him unless they have earned their stripes as agents and been elected by their peers to be their leader.

 

Indeed, SingPost&rsquo s next group CEO may not come from among its postmen. But without a strategy to chart the way forward, what would serve as a compass to help the board nail down the ideal candidate?

 

Thus, it is imperative for SingPost to decide without further delay on its new strategy &ndash and the person to execute it.

Singapore Post (SingPost) has announced that it will hold an Extraordinary General Meeting (EGM) on March 13 to seek shareholders&rsquo approval for the proposed divestment of its Australia business, Freight Management Holdings (FMH), to Pacific Equity Partners (PEP).

 

The transaction represents an enterprise value of A$1.02 billion ($867.0 million). 

 

FMH, a leading technology-enabled logistics provider, has grown significantly since SingPost&rsquo s initial investment in 2014, says SingPost in a Feb 26 bourse filing. Formed through strategic acquisitions and mergers, including CouriersPlease and Border Express, FMH has become among the top five logistics players in Australia by revenue, adds the company. 

 

&ldquo This EGM provides our shareholders with the opportunity to vote on this important transaction, which we believe will unlock substantial value,&rdquo says Simon Israel, chairman of the board, SingPost. &ldquo The proposed divestment delivers a strong return on our investment in Australia. It crystallises the unrealised value of the business and brings forward unlocking value for shareholders. We encourage all shareholders to review the details of the transaction and participate in the EGM.&rdquo  

 

FMH is held through SingPost Australia Investments (SPAI). From the divestment, the SingPost Group expects to receive gross proceeds of approximately A$775.9 million in cash, which is approximately $274.8 million in excess of the net asset value (NAV) of SPAI as at Sept 30, 2024 

 

The transaction is expected to generate a gain on disposal of approximately $289.5 million.

 

The levered return on equity is approximately four times the SingPost Group&rsquo s A$93.6 million equity investment in FMH over the last four years. 

 

The SingPost Group intends to use some of the proceeds to repay borrowings, in particular, its Australian dollar-denominated debt amounting to A$362.1 million as at Sept 30, 2024, undertaken for the financing of the acquisition of FMH. 

 

The board is also considering the payment of a one-tier tax-exempt special dividend, subject to the completion of the proposed disposal. 

 

Further announcements on the special dividend will be made &ldquo at an appropriate time&rdquo when the FY2024 ended March 31 financial statements of the group are released in May. 

 

Following completion of the proposed disposal, the SingPost Group will consist mainly of two business units, being Singapore and International. 

 

The remaining business of the SingPost Group will continue to be a postal and eCommerce logistics provider in Asia Pacific. 

 

&ldquo Given the materiality of the sale of the Australian business, the board has stated that the SingPost Group will need to reset its strategy after the completion of the proposed disposal. The board will consider the progressive divestment of the Group&rsquo s non-core assets to pay down debt and create a pool of funds to re-invest subject to its strategy reset and/or return to shareholders, while at all times ensuring the Group is appropriately funded,&rdquo reads the announcement.

 

In the interim, the Group will consider investing in completing the transformation of the Singapore Postal and Logistics business into a&rdquo sustainable business&rdquo by supporting the growth of eCommerce logistics. 

 

The board is &ldquo confident&rdquo that the proposed disposal is in the best interests of the company and its shareholders as it enables SingPost to unlock significant value upfront, reinforcing the Group&rsquo s liquidity and supporting meaningful deleveraging of debt. 

 

A circular to shareholders with the relevant information relating to the proposed disposal will be shared on Feb 26. In the event that shareholders do not vote in favour of the proposed disposal, the board will review and reconsider its strategy in relation to its Australian business. 

 

Background on the divestment

 

In July 2023, the Board initiated a strategic review of the SingPost Group&rsquo s portfolio of businesses, with a view to enhancing shareholder returns and ensuring that the SingPost Group is appropriately valued. Bank of America (BofA) was appointed financial adviser to the Board. 

 

During the strategic review, SingPost received unsolicited interest in the acquisition of FMH, leading to an international competitive bid process conducted by BofA. 

 

After evaluating various options, including full and partial divestments, organic and inorganic growth strategies, the board determined that a full divestment was the best option and a first step towards bringing forward and unlocking value for shareholders.