Hot stock: SingPost hits 7-week high; to review costs and operating model with IMDA

SHARES of Singapore Post (SingPost) reached a seven-week high on Thursday (Jul 6) after the Singapore government said it would consider allowing the national postal service provider to adjust its postage rates to “better reflect the cost of letter mail business”.

The counter rose as much as 7.7 per cent or S$0.035 to reach a high of S$0.49 in early morning trade. The last time the counter closed near this level was on May 15.

As at the midday break, SingPost’s shares were up 6.6 per cent or S$0.03 to S$0.485, with seven million shares changing hands amid heavy trading.

The company later announced it would work with the Infocomm Media Development Authority (IMDA) to review its costs and operating model.

This includes the optimisation of SingPost’s post office network, and seeking the authority’s approval for additional postage rate adjustments to “better reflect the true cost of the letter mail business”.

It also intends to work with IMDA “towards a framework for long-term sustainability and commercial viability of the domestic postal service”.

Citing rapid digitalisation and structural decline in mail volume, SingPost noted that the average consumer sends less than one letter per month.

By collaborating with IMDA on its review, SingPost said it aims to enhance efficiency and effectiveness while maintaining commercial viability for it to “continue delivering quality postal services to the community”.

“Through this structural review, SingPost seeks to balance the interests of our stakeholders as the public postal licensee and ensure its commercial viability,” said group chief executive Vincent Phang.

Potential postage rate adjustments would have to be sufficient enough to allow SingPost’s business model to remain viable without needing direct government funding, said Minister of State for Communications and Information Tan Kiat How in Parliament on Wednesday.

Tan was responding to a question on the viability of SingPost’s post and parcel business and whether measures are being taken to ensure the continuity of these services.

On May 11, SingPost said it was evaluating the commercial sustainability of its domestic postal business as part of a strategic review of its portfolio.

The move comes after the group delivered a 28 per cent drop in earnings for the second half ended 2023. For the full year, net profit was down 70.3 per cent despite record revenue.