TARGET PRICE: S$1.05 (SELL)
SingPost released its third-quarter results last Friday, with net profit for 9M FY16/17 falling 31.3% from S$143m to S$98.6m. The fall in net profit come despite a 22.8% rise in revenue, from S$833m to S$1,024m. In light of the falling profits, SingPost has declared an interim dividend of 0.5 cents, down from 1.5 cents in 3Q FY15/16.
Potential impairment of intangible assets
Due to the poor performance of TradeGlobal, an eCommerce firm based in the US which SingPost acquired, the Board of Singpost has cautioned that there is a significant risk of impairment to TradeGlobal's carrying value. Our view is that SingPost has overpaid for acquisitions over the past few years, including TradeGlobal, Jagged Peak and Couriers Please. TradeGlobal alone accounted for S$169m of goodwill, and as of 3Q FY16/17,
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