Singapore Post net profit stays flat at S$39.4m

Despite 3QFY14 revenues climbing 30.2%.

Singapore Post (SingPost) reported 3QFY14 PATMI of S$39.4m, which saw a 0.2% growth compared to year-ago figures in 3QFY14.

Meanwhile, revenues grew 30.2% yoy for the same period to S$222.6m, up from S$171.0m in 3QFY13, which according to OCBC Investment Research, was mainly due to contributions from acquisitions and an increase in e-Commerce activities.

Despite the flattish growth, the research firm said so far the year-to-date cumulated results have been within expectations. It also viewed positively SingPost's consistent dividend policy, "which is backed by stabled operating cash flows."

Here's more from OCBC Investment Research:

3QFY14 results in line. Singapore Post (SingPost) reported 3QFY14 PATMI of S$39.4m which was flat YoY (-0.2%). 9MFY14 PATMI now cumulates to S$112.3m, constituting 76.0% of our full year forecast and we judge this to be mostly in line with expectations. In terms of the topline, 3QFY14 revenue grew 30.2% YoY to S$222.6m, up from S$171.0m in 3QFY13, mainly due to contributions from acquisitions and an increase in e-Commerce activities. Net flow generated by operating activities remained healthy at S$40.2m in 3QFY14 versus S$39.8m generated in 3QFY13. We note that total expense growth in 3QFY14 rose at a rate (up 34.4%) marginally above that of revenue (30.2%) due to increased exposure to lower net margins businesses.

Domestic mail volume decline for the 8th consecutive quarter. Domestic mail volume declined for the eighth consecutive quarter but including e-commerce packages overall mail revenue for 3QFY14 grew 12.8% YoY to S$133.2m. Revenue from the logistics business was boosted by contributions from two acquisitions, General Storage Company and Famous Holdings (acquired Jan-13 and Feb-13, respectively), and grew 64.5% YoY to S$101.2m. Excluding contributions from these two acquisitions, however, logistics revenues grew 4.3% YoY. For the Retail and e-commerce segment, 3QFY14 revenue dipped 6.1% YoY to S$22.6m as contributions from agency services declined. Rental and property-related income for the quarter held steady and increased 1.9% YoY to S$11.4m.

Steady yield play. In line with its usual practice, the group has proposed an interim quarterly dividend of 1.25 S-cents/share. We continue to like SingPost’s consistent dividend policy which is backed by stable operating cash flows, but see few re-rating catalysts for now. Maintain HOLD with an unchanged S$1.32 fair value estimate.