SingPost, citing the impending GST hike and higher costs, will be raising its postal rates with effect from the new year.

 

The so-called standard regular rates for mail weighing 20g and 40g will be raised from 30 cents and 37 cents to 31 cents and 38 cents.

 

With effect from Jan 1 2024, the rates will be raised further to 32 cents and 39 cents respectively.

 

Rates for other services such as tracked email, registered service and smartpac, will be raised too.

 

Singapore' s GST rate will be increased to 8% from the current 7% with effect from Jan 1 2023, and to 9% come 2024.

 

" The adjustments in rates are inclusive of the increase in GST, as well as reflect the exceptional cost increases. The last revision to rates took place nine years ago, in 2014," says SingPost in a statement on Dec 16.

 

Neo Su Yin, Singapore CEO, SingPost says that Singapore offers one of the lowest postage rates in the world for a developed nation.

 

" Like our customers, SingPost has also been bearing the impact of inflationary cost increases across manpower, fuel and electricity that have risen significantly," says Neo.

 

The adjustment in rates will help us maintain our service offerings and high service standards, and enable us to operate sustainably with the GST hike. We remain committed to keeping our postal service relevant in the eCommerce age, bringing value to, and better serving the needs of our customers," she adds.

 

S& P GLOBAL Rating on Tuesday (Dec 13) revised its outlook for Singapore Post : S08 0% (SingPost) on weaker prospects in the group&rsquo s postal and parcel business, as well as elevated leverage in the next 24 months.

 

This came after letter mail volumes declined sharply during Covid-19 as companies moved towards online correspondence, said S& P, noting that such behaviours have persisted post-Covid-19.

 

SingPost&rsquo s business took a greater hit after it suspended its advertising mail business due to a labour shortage. Analysts noted that mail volumes for the group continued to weaken 2 per cent year on year in H1 of fiscal year 2023.

 

They also foresaw the group&rsquo s leverage to remain elevated in the coming years, projecting a debt-to-Ebitda (earnings before interest, taxes, depreciation and amortisation) ratio of 3.4 to 3.8 times in fiscal 2023, up to 3.3 times in fiscal 2024 and up to 2.8 times in fiscal 2025.

 

This was driven by rising costs, including high conveyance costs and operating expenses such as fuel and utilities, said the analysts.

 

&ldquo Moreover, the loss of a major customer in the domestic e-commerce business accentuated a difficult earnings condition,&rdquo they added, noting that SingPost&rsquo s postal and parcel segment recorded an operating loss of S$12 million in the first half of FY2023.

While the improving lockdown situation in China could provide some relief, the extent and timing of SingPost&rsquo s recovery is uncertain.

 

S& P cautioned that a downgrade could follow if the debt-to-Ebitda ratio does not meet expectations to drop below 2.5 times.

 

However, the outlook for the group could improve if it &ldquo demonstrates its ability to enhance profitability and strengthen competitive position such that it will counter the structural decline in the postal and parcel business&rdquo , added S& P.

 

The credit rating agency maintained its &ldquo BBB+&rdquo long-term issuer credit ratings on SingPost, as well as a &ldquo BBB-&rdquo issue rating on S$250 million senior perpetual securities guaranteed by the company.

CGS-CIMB has upgraded its call on Singapore Post : S08 -2.78% (SingPost) to &ldquo hold&rdquo from &ldquo reduce&rdquo while maintaining its target price of S$0.55.

 

The analyst Ong Khang Chuen said he foresees a recovery for SingPost even after the postal service company on Thursday (Nov 3) posted a net loss of S$9.9 million for the half year ended Sep 30, after accounting for an exceptional item related to the acquisition of an Australian unit.

 

Describing the results as &ldquo broadly in line&rdquo with previous forecasts, Ong noted that SingPost&rsquo s Q2 operating profit of S$30.7 million signalled a &ldquo strong rebound&rdquo , tripling quarter on quarter against Q1 2023.

 

He also pointed to reversed losses in SingPost&rsquo s post and parcel segment, the growing volume of its e-commerce business and the scaling of its Australian business as signs that the company will recover.

 

The analyst increased forecast revenue for FY2022 to S$2 billion, up from S$1.9 billion previously, and lowered earnings per share for FY2022 to S$0.009 from S$0.014. CGS-CIMB maintained its valuation of SingPost at a price-to-equity multiple of 15.8 times for 2023, which is one standard deviation below its five-year historical average.

 

Ong however remained cautiously optimistic as he believes the road to recovery &ldquo likely remains bumpy&rdquo .

 

&ldquo We think the worst could be over for SingPost, though the pace of recovery from current levels remains uncertain given various macro headwinds,&rdquo the analyst said, flagging lower ocean freight rates as a potential bane for the company&rsquo s freight forwarding business. 

 

He added that prolonged volume weakness on the domestic front could pose further challenges to the post and parcel business.

 

Earnings per share declined to 0.68 cents from 1.23 cents a year ago. 

 

SINGAPORE - Despite attaining its highest half-year revenue ever, Singapore Post reported a net loss of $9.9 million for the first half of the fiscal year ended September 2022, reversing from its profit of $35 million for the same period in 2021.

 

Earnings per share fell to 0.68 cent from 1.23 cents a year ago.

 

The board has declared an interim dividend of 0.18 cent per share for the half year, which will be paid to shareholders on Nov 30. For the same period in 2021, the group had declared an interim dividend of 0.5 cent per share.

 

In its results released on Thursday, the postal service company attributed the loss to a higher put option redemption liability on Freight Management Holdings (FMH), which had been consolidated in December 2021. Higher valuation of the company led to a fair value charge of $21 million.

 

Revenue for the first half of the fiscal year came in at a record $958.9 million, driven mainly by higher contributions from the logistics business, which drew in $680.8 million, up 79.4 per cent from $379.5 million a year ago. This was credited to the consolidation of FMH and international freight forwarding volume growth.

 

However, the group noted continued weakness in its post and parcel business, which registered a 19.6 per cent year-on-year drop in revenue to $261.7 million.

 

On the international front, elevated air conveyance rates and lockdowns in China were cited as key factors in the decline.

 

On the home front, the group pointed to a dip in the volume of domestic letters and parcels, as well as a major customer who had insourced its logistics.

 

Operating expenses for the first half rose 34.9 per cent to $920.8 million, from $682.6 million for the same period a year ago. This more than offset the group&rsquo s 31.1 per cent increase in revenue, leading to a decline of 19.1 per cent in operating profit to $41.3 million, down from the $51.1 million posted previously.

 

Commenting on its outlook, SingPost said it remained optimistic, highlighting that its revenue and earnings profile will continue to shift towards logistics and overseas markets as it executes new growth initiatives. It also expressed hope for its property business, citing &ldquo healthy interest and demand seen in the Paya Lebar Central area&rdquo .