SingPost’s ebit of $10.6 million in 1QFY2023, a 47% year-on-year (y-o-y) decrease, came in below expectations at 9% of both Ong and Bloomberg consensus’ FY2023 expectations, despite profit guidance in July 2022 already signalling a tough operating environment for Singpost’s post and parcel business — which entered into an operating loss position during the quarter.
CGS-CIMB analyst Ong Khang Chuen has downgraded his recommendation for Singapore Post (SingPost) from “add” to “reduce” with a target price (TP) of 55 cents from the previous target of 80 cents, following its underwhelming 1QFY2023 results.
Ong believes SingPost’s net profit could remain dragged in the near-term until its international post and parcel (IPP) segment shows stronger signs of recovery. His 55 cent TP is based on 15.8x FY2023 P/E, 1 standard deviation (s.d.) below SingPost’s five-year historical average, and lowered from 18.8x due to “near-term headwinds”.
