Analyst sees drawbacks from proposed SingPost rate adjustments

CGS-CIMB said there are other potential catalysts to improve the business.

The plan to review adjustments in Singapore Post (SingPost) postage rates may do harm more than good once accelerating volume declines, said CGS-CIMB.

In a brokerage report, the analyst said they said whilst the adjustments may be in the right direction, there should also be a holistic approach to tackle the structural issues of postal decline.

Another potential to look at, the broker suggests, is the “rationalisation of the post office network and/or sorting centres in Singapore to lower fixed overheads, which could also open up opportunities for SingPost.” In doing so, it will monetise SingPost’s investment properties worth $965m.

“We see this as a step in the right direction, helping near-term share price sentiment given its post and parcel segment is loss-making,” read the report. The broker reiterates its hold call for SingPost.

Meanwhile, the postal firm working with Infocomm Media Development Authority (IMDA) will allow a review of sustainability of postal services.

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