SINGAPORE (March 7): OCBC Investment is maintaining its “hold” call on Singapore Post (SingPost) with a lower fair value of $1.39 from $1.42 previously, while noting a lack of catalysts for re-rating on the stock.
This comes after the group’s Monday evening announcement of the resignation of its CEO (SP Commerce) Marcelo Wesseler – whom it says will be assisting the company to “ensure a transition of duties” during his period of notice until Jun 5.
Meanwhile, Paul Demirdjian, who is currently president and CEO of SingPost’s US subsidiary Jagged Peak, has been appointed as interim CEO, US Business, with immediate effect to oversee the group’s businesses in the US.
“SingPost is investing for the future, and time is required for the efforts to bear fruit. After correcting post its 3QFY17 results, the stock has been trading within a range of $1.37 and $1.40, likely due to lack of catalysts,” comments lead analyst Low Pei Han in a Tuesday report.
She also notes that the group has been increasing its foothold in Indonesia, with its 66%-owned joint venture subsidiary Quantum Solutions International (QSI) having recently purchased shares in PT Rantai Bumi Laut (RBL) to acquire about 18% of PT Quantium Solutions Logistics Indonesia’s (QSLI’s) shares for about $0.8 million.
Upon completion of the share purchase agreement, QSI’s interest in QSLI, which is in the business of ecommerce logistics fulfillment in Indonesia, will be 67%.
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“Recall that QSI set up QSLI with RBL in Jan 2014 with an initial paid-up capital of about $375k, of which 49% was subscribed by QSI. According to a study by Google and Temasek last year, 18 million people in Indonesia fell into the category of online buyers, representing about 7% of the population. By 2025, it is expected that Indonesia will dominate 52% of all ecommerce activity in SE Asia, due to its huge population island geography,” says Low.
“Meanwhile, the market will likely look forward to 1 Jun 2017, which is when the new CEO joins the group,” she adds.
As at 9.57am, shares of SingPost are down by 1 cent at $1.36.
