Maybank Securities has initiated coverage on Singapore Post S08 with a "buy" call and sum-of-the-parts-based target price of 74 cents.
In his Nov 25 note, analyst Jarick Seet calls the logistics and postal company "deeply undervalued".
Seet points out that SingPost is underway in its bid to monetise and streamline its businesses. He sees "significant potential value" from two fronts: the sale of SingPost's Australia-based units such as Famous Holding.
Next, SingPost Centre, which generates significant rental income from its retail space, and is valued at around $1.2 billion and can possibly be sold along with other properties over the next one to two years.
Smaller properties that might be sold will come from the company's shrinking network of more than 40 post offices can be reduced by half, suggests Seet.
According to Seet's estimates, SingPost might fetch between $0.9 billion to $1 billion from these divestments and can then use proceeds to pare down debt and thereby financing costs.
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SingPost now carries some A$600 million worth of debt at 5% tied to its Australian operations, implying financing costs of some $50 million a year.
He says that several of Singapore's listed government-linked companies have undergone restructuring like Keppel and Sembcorp Industries U96 and share prices have risen at least 18 to 150% since then. "We believe SingPost will follow suit," says Seet.
"We expect further sharp rises in earnings and dividends from synergies and cost optimisation, as seen in 1H2025," says Seet, adding that "the conclusion of SGX’s review may also be a catalyst".
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Seet's SOTP-based valuation is at 86 cents per share but has applied a 15% holding company discount to derive his target price of 74 cents.
SingPost shares closed at 54 cents on Nov 22, unchanged for the day but up 13.83% year to date.
