The 2nd high quality piece at Corporate Monitor is on Singpost.
The only unfortunate thing is that it is telling us what most of us already know (and hence what to avoid). Of course, Corporate Monitor is "non-profit" and so we can't expect it to be giving FOC advice on what to profit from
I assume the end game for Singpost will be very similar to SPH and SMRT. But we wouldn't be expecting a bidding war for its single asset.
Singapore Post: Analysis of its Strategic Transformation and Governance 2024
Management of capital is one of the 5 strategic thrusts for SingPost, but it is here that the group has not fared well. Management has stated that the target return on equity (ROE) is in “the teens”. However, SingPost‘s ROE has been below that since 2017. Worse, SingPost didn’t even earn its cost of equity, which we conservatively estimate to be 9%. In the last 10 years, SingPost’s ROE only exceeded the cost of equity 3 times, and not since 2019. ROE fell to as low as 2% in 2023, and not much better in 2024, at 3.8% after stripping out the valuation gain (which is non-cash) of SPC. While reconstructing its reported ROE, we had also observed that SingPost had selected an approach that wholly excludes its perpetual securities, thus boosting the reported ROE. We would like SingPost’s management to articulate a more specific ROE target, and more importantly a road map and timeline to achieve that. Otherwise, talk of an ROE target in “the teens” rings hollow.
By not achieving ROE above its cost of equity, SingPost has been destroying shareholder value. Admittedly, this is largely due to the rapidly declining profitability of the Post & Parcel business, but management is ultimately responsible.
In conclusion, SingPost faces daunting strategic challenges that are inter-connected. The Post & Parcel business continues to be the root of SingPost’s problems. The Australian business is doing well but could not make up for the profit that Post & Parcel used to earn. There is no growth in the property business, which is non-core anyway. Finding growth is the biggest problem for the group. Without growth, balance sheet leverage will continue to be a problem and will expose SingPost to financial risks. Without growth, ROE will continue to be depressed. However, a leveraged balance sheet in turn constrains growth, as SingPost lacks the financial resources to fund the Australian business, which is the only one with realistic growth prospects.
https://corporate-monitor.org/singapore-...overnance/
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