SingPost leadership change won’t derail divestment strategy

The company is still expected to sell Famous Holdings and SingPost Centre.

Following the termination of three of its senior management executives, Singapore Post is still expected to continue the sale of its Australian business and the divestment of its non-core assets, UOB Kay Hian said.

SingPost’s Australian business remains to be on track to be sold to Pacific Equity Partners.

PEP shall acquire the Australian business at an enterprise value of A$1.02b ($897m) whereby SingPost would acquire A$776m ($683m) in cash and post an expected one-off gain on disposal of around $312m upon completion.

UOB Kay Hian said that it expects SingPost to continue its monetisation of non-core assets and businesses and maintain expectations that Famous Holdings would be the next non-core asset to be divested in the short-medium term.

“We also understand that M&As and divestments are board-driven and that the recent change would not alter the group’s strategy to divest non-core assets. However, in our view, we reckon that the timeline and schedule of future divestments may be impacted as the new management executives take over. Assuming a 5x EV/EBITDA multiple, we value Famous Holdings at around $130m. Also, we value the SingPost Centre at close to $900m and opine that any divestment/sale would likely be a minority stake sale,” UOB Kay Hian said.

In a previous, statement, SingPost clarified that there is still no certainty that any transactions will arise amidst discussions with third parties on a potential sale of its freight forwarding business Famous Holdings.