Similarly, SingPost has pledged to divest its non-core assets and businesses after completing a strategic review initiated in May 2023 and concluded in March 2024. Following the review, SingPost reorganised its operations into three business units — Singapore, Australia and International — and identified a list of assets deemed non-core to its business. These would be divested to deploy capital back into its main businesses.
In FY2025, SingPost reported earnings of $245.1 million, 212.9% higher y-o-y, boosted by an exceptional gain of $222.2 million. The gain was largely from the $302.1 million gain on the disposal of SingPost Australia Investments (SPAI) — the entity holding the group’s Australian businesses — and $15.2 million in fair value gains on properties.
Excluding divestment gains, underlying net profit fell by 40.3% y-o-y to $24.8 million. In 2HFY2025, SingPost swung to an underlying net loss of $0.5 million, reversing from last year’s $28.1 million profit due to the “intensifying challenging and uncertain conditions in the global logistics sector”.
Was divesting Australia worth it?
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Although the strategic review was aimed at selling non-core businesses, SingPost ended up divesting what was arguably its crown jewel — the Australian business. Following the divestment, Yon notes that what remains are a handful of disparate assets: a “booming” SingPost Centre, an “underperforming and shaky” International business due to trade tariffs, a small but profitable freight company, and its core mail business, which “continues to be shaky”.
When asked whether the group had any regrets letting go of its Australian business, given the ongoing uncertainties and that SPAI was the largest contributor to the group’s overall revenue and operating profit in the 1HFY2025 before its sale, at 57.9% and 59.38% respectively, group CFO Isaac Mah was certain that the group made the right move.
During the 2HFY2025, SPAI, reported as discontinued operations, made a loss of $1.1 million compared to its $19 million profit in the 2HFY2024. “So the operating environment in Australia is challenged,” Mah told the media at SingPost’s results briefing, adding that the group had geared up “quite significantly onshore” to complete some of the acquisitions made in the country.
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He also reiterated chairman Simon Israel’s earlier comments that SingPost was not looking to sell its Australia business to begin with, but only considered it when an unsolicited offer came their way.
“The thinking was always that we had to do [an] equity raise, which was the original intention of the Australia strategic review. However, as part of that process, we received an unsolicited 100% bid for the company, which then led to this whole process to sell,” he adds.
While the sale of SingPost Australia delivered a “great” return on equity (ROE) and enabled the group to return to a net cash position, Yon warns that SingPost’s future earnings may not support its current valuations, unless the group distributes most of its cash. This is given that a huge drop in earnings is expected next year due to the current macroeconomic environment.
Even with a special dividend of 9 cents per share, Yon notes that this was “not enough” for shareholders given the less-than-stellar 2HFY2025 results, as seen in the group’s share price plunge on May 16. Furthermore, he points out that SingPost spent years building up its Australia business and questions whether a similar opportunity can be found.
The special dividend of 9 cents also came slightly below the expectations of Maybank Securities’ Jarick Seet, who was expecting special dividends of at least 10 cents per share.
In response, Mah explains the board had to strike a balance between returning the proceeds to its shareholders, propping up its balance sheet and saving some money for future growth.
“But at the same time, we also were cognisant that we have communicated to our shareholders that we will undergo this programme to unlock value and return capital to shareholders,” he says. “So it was decided that two thirds would be a significant amount of the profits to be returned to shareholders. So that’s how we ended up at the 9 cents.”
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Reintegrating its businesses, seeing a change in segments
Post-divestment, SingPost is reintegrating its international cross-border business into its Singapore postal and logistics business. The move comes as SingPost sees cross-border logistics volumes facing pressure amid the current uncertainties as well as ongoing trade tensions disrupting international trade flows and creating greater volatility in supply chains. The group adds that the “challenging conditions” intensified in the second half of its FY2025 and are expected to persist in the coming FY2026.
“Previously, due to Covid-19, we had to diversify away from using Singapore as a hub. And in that space, we had found it very competitive versus the global players, and we were simply not at scale when compared to the global players,” says Mah about SingPost’s International business. “So given the challenging environment and the risks around geopolitical tensions, we’ve decided to move away from that space and refocus on our core competencies here in Singapore.”
However, SingPost still sees the business as one of its “core offerings” and will continue to remain in this space. The group is also looking to sell its freight forwarding business, Famous Holdings, an asset, which was previously identified as non-core. Mah shares that the group has received “interest” but it has a “discipline around these divestments”.
With the changes in its business, SingPost says it is likely to change its reporting segments, although further details will only be shared in the 1HFY2026.
This comes just six months after the group unveiled its new set of reporting segments to Australia, International and Singapore in its 1HFY2025 results, replacing its previous segments, which were logistics, post & parcel and property.
The new setup means SingPost will see certain functions duplicated across its business units. These redundancies have since been removed. For instance, the CEO of the Singapore business has left of his own accord while the International CEO now heads SingPost’s commercial arm.
In February, SingPost announced a restructuring exercise. The 45 affected employees, who were mainly from corporate support units with a small number from the International business unit, were at the management and middle management levels and have “left the business” over the past three to four months.
Making its postal business sustainable
Beyond divestments, the group still has to plan for its Singapore postal & logistics business, which is still “sustainable” with a “sustainable future”, according to Mah.
For FY2025, the domestic business reported an operating profit of $6.5 million, up from $1.9 million. The business was boosted by the postal & logistics and others arm, which saw profit increase by 27% y-o-y to $20.9 million, but dragged by the post office network, which continues to make a loss of $14.4 million, from last year’s loss of $14.5 million.
In March, SingPost announced that it would invest $30 million to grow its regional eCommerce Logistics Hub facility and its processing capacity.
With the efficiencies brought about by the new investment, Mah said the group could potentially consolidate the market and open up its network, which is currently closed to other players. The group is also considering partnerships in this space.
On its post office network, Mah says the group is continuing to engage the government to work out a more sustainable model, although he notes that these things take time and that the group is “making some headway”. When asked if postal rates will be further increased, Mah notes that it is one of the “potential outcomes” in the group’s dialogue with the government.
As of May 15, SingPost operates 42 branches. While it has not been allowed to reduce the number of post offices, the group is optimising their use by using a lesser amount of space for its operations and leasing out the rest. Of these branches, SingPost owns 21 of its post offices and collects rental income from them.
SingPost Centre delivers
In FY2025, SingPost’s Singapore property segment saw higher revenue and operating profit of $86.9 million and $48.4 million, 11.9% and 14.7% higher y-o-y. This was due to higher rental income from SingPost Centre. The property saw higher overall occupancy of 98.2% from 96.2% last year thanks to improvements from its retail and office space.
While SingPost Centre has been generating “very strong cash flows”, the group still intends to dispose of the asset since it is seen as non-core to its operations, although it has not made any additional progress into the divestment.
To this end, Mah notes that the group is focused on boosting its logistics capabilities. With the group’s plan to move its sortation capabilities to its eCommerce Logistics Hub facility, this would open up some 83,000 sq ft at SingPost Centre for other types of value creation such as by renting the space out.
Analysts adopting wait-and-see approach
Analysts are mostly adopting a wait-and-see approach as they see SingPost’s strategy shift remaining unclear.
“SingPost’s future strategy and leverage policy remains uncertain, in our view,” say S&P Global Ratings analysts Ong Hwee Yee, Minh Hoang and Pauline Tang. The ratings agency has a BBB long-term issuer credit rating on SingPost and a BB+ issue rating on the subordinated perpetual securities that the group guarantees.
In a May 15 report, OCBC Investment Research analyst Ada Lim maintained her “hold” call as she prefers to wait for “further clarity” on SingPost’s next engine of growth now that it has divested its Australia business, which was a “significant growth driver” for the group in recent years.
Maybank Securities’ Seet, who kept his “buy” call, noted that SingPost’s work on its new strategy will begin once it has a full new board in place. “This should lead to more clarity on its new strategy in the new few months,” he writes in his May 16 report.
The analyst believes that asset monetisations should be the main focus. He adds that he sees the group stepping up its efforts to reduce the size and scale of its loss-making postal network and sell some properties, including SingPost Centre, to unlock value for its shareholders. In addition, Seet expects the sale of Famous Holdings to be finalised within 3Q2025. “All in all, the asset monetisation and rewarding shareholders with special dividends should continue,” he says.
While Seet expects SingPost to turn profitable in FY2026, the group is expected to remain “weak” due to the challenges faced by its International business and the high costs of its local postal network. However, rather than focus on SingPost’s earnings, he believes that investors should look at its asset monetisation process and dividends.
To Yon, SingPost will need a huge buyer given that the property is worth at least $1 billion. However, he believes the group is no longer in “urgent need” of selling the building given its net cash position. He also sees that huge capital expenditure is needed to turn the logistics segment back into retail.
While Yon does not have a call and target price, Seet has lowered his sum of the parts (SOTP)-based target price to 74 cents from 77 cents previously, based on the group’s net assets per share.
Lim’s target price has been lowered to 60.5 cents from 62 cents due to the change in her discounted cash flow (DCF) calculations to a SOTP valuation.
A new chairman and potential sale of its properties
On May 21, SingPost announced that Teo Swee Lian will be taking over the role of chairman of the board from Israel. The change will take place at the group’s upcoming AGM.
Israel has been in the seat for nine years and oversaw some major changes including the divestment of its Australian business.
When asked about a potential new group CEO, Mah says the hiring will be part of the board transition and the resetting of the group’s strategy.
With all these moving parts, Mah says the group’s immediate focus is the continued streamlining of its business, followed by its engagement with the government. The process of the board renewal is also another focus.
As at the time of reporting, The Edge Singapore understands that SingPost is initiating the divestment of 10 HDB shophouses around Singapore, in line with the group’s plan to sell its non-core assets.
“Plans are for a sale and leaseback model to maintain [our] current post office services. Further details are pending the sales launch by our appointed agency CBRE,” says a SingPost spokesperson.
