Here's why you should hold on to Singapore Post stock

It can churn out consistent dividends.

Singapore Post stock is also supported by stable operating cash flows which allows it to deliver those dividends, according to OCBC Investment Research, making it "a good stock to hold in the current volatile environment."

Here's more from OCBC:

Since our last report on Singapore Post (SingPost) on 6 May 2013, its share price rose about 8.5% to reach S$1.40 in mid May, but fell by an even greater amount (~10%) subsequently to its current price of S$1.25.

As mentioned in our earlier report, we expect the stock to be supported by investors seeking yield, given the nature of SingPost’s businesses and consistency of its dividends.

However, the strength of its rally (boosted by heightened interest in dividend-yielding instruments such as REITs) took us by surprise, and the subsequent profit-taking by investors has brought the share price down to a range that is supported by fundamentals.

With increasing labour-related expenses and administrative expenses, operating costs of the group have been steadily increasing. The changing profile of mail (domestic mail expected to trend lower though number of households in Singapore trends higher) has also meant a rapid growth of packages and decline in letters, leading to more investment requirements by management in its infrastructure.

The group is in the midst of transformation to diversify its businesses, having embarked on quite a number, albeit relatively small, acquisitions so far. More recently, the group announced that it has completed its acquisition of 30% interest in Dash Logistics Company.

SingPost is a good stock to hold in the current volatile environment, as its consistent dividends are backed by stable operating cash flows. We look forward to the group’s transformation as it seeks more growth opportunities, but till then, we see limited upside potential unless earnings growth from its acquisitions proves to be better than expected. Still, we expect the share price to be supported by investors seeking yield (~5% FY13F). Maintain HOLD with S$1.23 fair value estimate.

If you've been wondering whether SBR could work for your company — yes, probably.

A lot of the companies we partner with started as readers. They'd been following our coverage for a while, saw their own customers and competitors in it, and eventually asked the obvious question: could we do something with you? The answer is usually yes. The shape of it depends on what you're trying to do.

The options are broader than most people assume — thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. Some partners use one channel; most use a mix. We figure out the right combination by starting with your brief, not with our rate card.

So if the question has been on your mind, here's the easy way to ask it.

We'll tell you honestly whether we can help, and how. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia