Brokers' take

Singapore Post | Hold Target price: S$1.64 July 25 close: S$1.48 UOB Kay Hian, July 25

We believe Singapore Post could see a potential kitchen-sinking exercise in FY2017 as earnings will likely be reined in by integration headwinds and goodwill provisions from leadership changes. Nevertheless, we continue to view positively SingPost's steps to improve corporate governance, and deem its transformation to an ecommerce and logistics outfit as necessary. We expect earnings to pick up in FY2018. Downgrade to HOLD.

Goodwill nearly doubled to S$493.5 million from FY2015 to FY2016, largely driven by the TradeGlobal acquisition in December last year, which recorded S$169.1 million worth of goodwill. We believe the newly appointed CEO (targeted to come in by end-Dec 2016) could start with a clean slate with a potential write-down of goodwill.