Announced last December, Pacific Equity Partners shall acquire SingPost's Australian business at an enterprise value of A$1.02 billion ($897 million). This translates to A$776 million in cash and an anticipated one-time disposal gain of about $312 million for SingPost.
SingPost plans to use roughly half of the cash proceeds to repay its Australian dollar-denominated debt of A$362 million. It may consider declaring a special dividend in due course, after accounting for future funding needs.
“We opine that the group would prioritise future growth opportunities/deleverage its balance over a large special dividend. Using $100 million of the remaining $362 million cash proceeds would result in a special dividend of around 4.4 cents/share and a dividend yield of 8%. Our base case assumes that SingPost maintains its FY2026-FY2027 dividends at the same level as FY20 25’s via special dividends,” says Tan.
He also expects SingPost to press ahead with divesting its non-core assets and businesses even though the timeline and schedule of future sales may be impacted as the new management executives take over.
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Famous Holdings is expected to be the next non-core asset to be divested in the short to medium term, with an estimated valuation of about $130 million based on a 5x EV/EBITDA multiple, according to Tan.
He also values the SingPost Centre at nearly $900 million, noting that any sale would likely involve a minority stake rather than a full divestment.
As at 11 am, shares in SingPost are trading flat at $0.54.
