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Hot stock: SingPost tumbles more than 7% after impairment risk warning
SHARES of Singapore Post (SingPost) tumbled more than 7 per cent in early Monday trade following the postal firm's warning of major impairment risk to the carrying value of its US e-commerce acquisition, TradeGlobal.
After hitting S$1.365 a share in early Monday trade, SingPost recovered to hover around S$1.405, down 6.5 Singapore cents, or 4.42 per cent, at 09:52am. More than 28 million shares changed hands.
TradeGlobal, the US e-commerce firm that SingPost acquired in 2015, is expected to incur losses for the full year as margins came under pressure amid intense competition.
Operating losses in the US e-commerce unit plus dwindling mail volumes and costs related to the new Regional eCommerce Logistics Hub drove SingPost's earnings down.
On Friday, SingPost reported a 28 per cent drop in net profit to S$31.4 million for the third quarter ended December 31, 2016. It also cut its interim dividend for the quarter to 0.5 Singapore cent versus 1.5 Singapore cents a year ago.
TradeGlobal accounted for S$169 million in goodwill and S$43 million in customer relationships - an intangible asset - in SingPost's 2016 financial statements.