SingPost's postal business to remain buoyant amidst digital disruptions

International mail revenue poised for a 3-year CAGR of 11.4%.

While domestic mail revenue has largely plateaued over the years in the face of digital disruption, SingPost's postal segment remained wellsupported by growth in international mail revenue, says UOB KayHian.

The research firm noted that the positive performance of domestic mail revenue was largely driven by higher outbound volumes from Alibaba.

According to UOBKayHian, as an indication of scale, in its latest financials release, Alibaba’s international sales increased 123% yoy to Rmb1.1b in Apr-Jun 16, and it is expected to
grow as Alibaba looks to increase overseas e-commerce revenue to 50%.

Meanwhile, the research firm expects international mail volumes in 3QFY17 to be seasonally higher, as SingPost gears up for events along the likes of Singles’ Day, Cyber Monday and Black Friday.

"We estimate international mail revenue to continue growing at a three-year CAGR of 11.4%
in FY17-19," it said in a report.