SINGAPORE (July 18): UOB KayHian is maintaining its “hold” on Singapore Post with an entry and exit price of $1.25 and $1.37.
UOB remains positive on SingPost’s long-term prospects although it expects near-term earnings to continue to be hampered by transformation costs.
“Losses at TradeGlobal and costs incurred to build out the e-commerce logistics network will be key earnings headwinds for 2018,” says UOB.
In an announcement this morning, SingPost’s board says it accepts the recommendation in the interim summary report by WongPartnership.
See: TradeGlobal ‘over-optimistic’ valuation did not raise questions from SingPost management team: report
After the impairment of TradeGlobal in May, SingPost engaged WongPartnership and FTI to assist on the review of circumstances surrounding the consideration and approval of TradeGlobal acquisition.
SingPost is executing a turnaround plan for TradeGlobal to recover as much value for shareholders and to focus on extracting post acquisition synergies from the networks.
Key observations included the absence of clear leadership and structure within the project management team which led to certain lack of ownership and accountability in respect to the acquisition.
Valuation performed also did not fully accord with best practices. For instance, justification of acquisition price did not appear to have considered Bregal's lower earlier transaction price or the underperformance of TG's main operating subsidiary in the years prior to acquisition.
Shares in SingPost are trading 1 cent lower at $1.36.
