IN AN update to a long-standing arbitration case that involves a dispute over a share purchase agreement, SingPost said it will be further defending itself against the claims filed by Tan Ho Sung over a share purchase agreement and shareholders&rsquo agreement in relation to Famous Holdings (FHPL) and its subsidiaries.

 

The potential impact of Tan&rsquo s claim &ldquo cannot be quantified at this stage&rdquo , the postal service group added in a bourse filing on Monday (Aug 15).

 

To recap, the arbitration primarily revolves around a put option which Tan exercised in respect of the balance 37.5 per cent of his shares in FHPL, as well as a sale and purchase of 62.5 per cent of the shares in FHPL from Tan by SingPost &mdash the latter was completed on Feb 20, 2013.

 

SingPost said that the sale and purchase of the remainder of 37.5 per cent of the shares had not been completed to date.

 

Tan first commenced arbitration proceedings against SingPost owing to differences between the parties on the final valuation. Singpost had to pay Tan for his FHPL shares at a &ldquo fair value&rdquo following a second partial award.

 

In September last year, Tan also served notices of arbitration against SingPost&rsquo s wholly-owned subsidiary, SingPost Logistics Investments (SPLI), and FHPL alleging the existence of a conspiracy between the SingPost and SPLI, and also his purported entitlement to dividends under such shareholding, SingPost said. The company added that Tan had not provided quantification of his claim in his case and arguments, and that it will continue to defend itself over these allegations.

 

Tan later filed another notice of arbitration on Feb 22 on SPLI. In it, Tan alleged there were breaches of the shareholders&rsquo agreement committed by SPLI which impacted the final amount payable for the balance shares in the ongoing arbitration against the company.

 

The notice of arbitration, however, did not provide a quantification of the claim and SingPost said its unit, SPLI, intends to defend itself against Tan&rsquo s allegations.

 

As the notice of arbitration for the claim is &ldquo lacking in particulars&rdquo and was not supported by quantifications, the potential financial impact of the claim cannot be quantified at this stage, SingPost said.

 

The company added that it was in consultation with its advisers in relation to the dispute with Tan and will make further announcements as and when there are material developments. 

 

SingPost is &ldquo examining options&rdquo of its property holdings that consist mainly of the SingPost Centre, says CEO Vincent Phang at the company&rsquo s annual general meeting on July 21.

 

Besides housing the postal operator&rsquo s headquarters and mail processing facility, there are also commercial spaces including office space as well as a retail mall, which has a gross floor area of 269,000 sq ft and a net lettable area of 178,000 sq ft.

 

The redevelopment of the mall space, costing some $150 million, was completed in 2017.

 

The mall space is managed by CapitaLand, which of course is known for its string of malls and REITs.

 

&ldquo We recognise the potential of the Paya Lebar precinct with the government&rsquo s latest urban development plans,&rdquo says Phang, without referring to adjacent developments including Paya Lebar Quarters and Paya Lebar Square &ndash all of which are in the vicinity of the Paya Lebar MRT interchange station.

 

&ldquo We are examining options to improve the value and hence yield of the property,&rdquo he adds.

 

Phang notes that property contributions to SingPost&rsquo s financial results have been resilient despite the &ldquo challenging leasing conditions&rdquo over the year.

 

As at March 31, occupancy of its properties remained high at 96.6%, says Phang.

 

SingPost&rsquo s property segment contributed an operating profit of $52.9 million for its year ended March 31, up from $50 million recorded in the preceding year.

 

CGS-CIMB said it was &ldquo negatively surprised&rdquo by the operating losses expected for Singapore Post&rsquo s (SingPost : S08 -1.55%) post and parcel segment for the first quarter to June, as a result of significantly higher costs and lower delivery volume from a major e-commerce customer.

 

In a report on Friday (Jul 15), analyst Ong Khang Chuen said he sees SingPost&rsquo s recent update as an implication of weakness in the group&rsquo s domestic post and parcel (DPP) volumes, given the high fixed-cost nature of the business.

 

This has prompted CGS-CIMB to lower volume and margin assumptions for DPP and cut SingPost&rsquo s FY2023 to FY2025 earnings per share estimates by 6 to 11.3 per cent to result in a lower target price of S$0.80, down from S$0.90 previously.

 

The brokerage has maintained its &ldquo add&rdquo call on the stock, while its revised target price remains based on 18.8 times a 2023 price-to-equity ratio, or half a standard deviation point below the counter&rsquo s historical average.

 

While Ong noted that the group&rsquo s strong growth in e-commerce volumes has been able to successfully offset traditional letter mail declines over the past few quarters, he believes this trend is &ldquo difficult to repeat&rdquo in FY2023 given the recent deceleration in e-commerce growth amid a tougher competitive landscape.

 

Based on SingPost&rsquo s recent operational update for Q1, the analyst also highlighted continued headwinds in the group&rsquo s international post and parcel (IPP) business, with traditional letter mail volumes declining in the latest quarter.

 

He nonetheless expects the group&rsquo s earnings to improve in the coming quarters, driven by a recovery in the IPP segment.

 

&ldquo IPP recovery was hindered by China lockdowns, which caused conveyance costs to remain elevated, but we expect an improvement in the coming quarters,&rdquo said Ong.

 

SINGAPORE Post : S08 0%(SingPost) said it will deliver an operating loss for its post and parcel business for the quarter to June, as a result of the significant increase in costs as well as a lower delivery volume from a major e-commerce customer.

 

In an operational update filed to the bourse on Friday (Jul 15), the mainboard-listed postal service company noted that costs have jumped significantly &mdash particularly that of fuel, labour and utilities.

 

Additionally, a major e-commerce customer cut its delivery volume as it now handles part of its own logistics. SingPost did not name the customer.

 

The international postal business, it stated, also came under pressure from further supply chain disruptions as well as a knock-on impact from the lockdowns in cities in China to stamp out the coronavirus.

 

&ldquo These have adversely impacted conveyance costs for our supply chains originating from China,&rdquo it said.

 

SingPost also said that despite the incremental air capacity improvement through Changi Airport, air conveyance costs were elevated as traffic in the quarter has yet to fully recover to pre-pandemic levels.

 

The logistics and property units, however, were doing well.

The board has proposed a final dividend of 1.3 cents per share, bringing the annual dividend for the financial year to 1.8 cents per share. The record date and date payable will be announced at a later date.

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Singapore Post on Friday (May 13) posted a 188.1 per cent rise in net profit to $48.1 million for the second half-year ended March 31, from $16.7 million in the year-ago period.

 

The results translate to an earnings per share (EPS) of 1.86 cents for the second half of 2022, against an EPS of 0.41 cents in the year-ago period.

 

This comes as the group records a 34 per cent growth in revenue, led by contributions from its logistics segment that helped offset a decline in revenue from the post and parcel segment. Revenue for the second half stood at $934.2 million compared with $696 million in the year-ago period.

 

The logistics segment saw revenue surge 90.3 per cent to $619 million, from $325 million in the year-ago period. The increase reflected contributions from Freight Management Holdings, which became a subsidiary of SingPost after the group increased its stake to 51 per cent in November 2021.

 

The post and parcel segment, meanwhile, saw revenue drop by 15 per cent to $296.8 million, from $349 million in the same period the year before.

 

For the full year ended March 31, 2022, SingPost' s net profit climbed 74.5 per cent to $83.1 million, translating to an EPS of $0.0309. Revenue rose 18.6 per cent to $1.7 billion.

 

The board has proposed a final dividend of 1.3 cents per share, bringing the annual dividend for the financial year to 1.8 cents per share. The record date and date payable will be announced at a later date.