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Hot stock: SingPost rallies more than 4% on its e-commerce vision
SINGAPORE Post (SingPost) saw its shares rally more than 4 per cent on Friday, as investors liked how the traditional postal group was making strides in e-commerce in its bid to stay relevant.
At 1:02pm, SingPost shares were trading around S$1.87 each, up 8 cents, or 4.47 per cent. More than 7 million shares changed hands.
On Thursday, SingPost said it was buying a 96.3 per cent stake in leading US end-to-end e-commerce provider TradeGlobal Holdings, for US$168.6 million.
TradeGlobal is a provider of integrated e-commerce enablement solutions, including fulfillment, customer care, logistics, web development, software and marketing services for the fashion retail industry. The acquisition comes less than a week after SingPost unveiled plans to buy e-commerce logistics enabler Jagged Peak.
OCBC's analyst, Carmen Lee, said while details were lacking, the research house has a "buy' call on SingPost, with a fair value estimate of S$2.19 a share.
"...we believe that any synergies from this deal will likely be longer term in nature although it will complement its existing operations in the e-commerce area, especially to widen its customer networks, technology and fulfillment capabilities. However, time will be needed to see how fast and successful the integration will be to enjoy the benefits of its expanded e-Commerce operations.''
SingPost expects its e-commerce revenue, currently at 28 per cent of the group's revenue, to increase significantly after the transaction. It said clients can expand their businesses into the US, and TradeGlobal's clients will have access to the e-Commerce landscape in Asia Pacific. Clients can also leverage on integrated technology and fulfillment capabilities, creating a one-stop global solution.