SingPost to dilute and potentially sell stake in Chinese e-commerce provider

SINGAPORE Post’s (SingPost) equity interest in Chinese e-commerce provider, Shenzhen 4PX Information and Technology (4PX), will be reduced to 17.61 per cent from 19.75 per cent after a loan capitalisation exercise.

The stake dilution arises from a share issuance exercise by 4PX to settle all outstanding amounts of an existing 400 million yuan (S$78.6 million) loan issued by Alibaba-owned Zhejiang Cainiao Supply Chain Management (Cainiao). The loan capitalisation is subject to and conditional upon certain regulatory approvals being obtained, said SingPost : S08 0% in a filing on Friday (Jan 20).

Separately, SingPost’s subsidiary Quantium Solutions International (QSI) has been granted two put options by Cainiao to dispose of its equity interest in 4PX. SingPost’s stake in 4PX is held via QSI.

The options are split into a 7.6 per cent and 10 per cent arrangement, in which QSI may exercise the put option to sell its 7.6 per cent interest in 4PX to Cainiao, any time after the loan capitalisation exercise for a cash consideration of about 251.3 million yuan. The consideration was determined based on a total valuation of 4PX at 3.3 billion yuan.

QSI may exercise the second put option to sell the other 10 per cent of its interests in 4PX to Cainiao for 264 million yuan, determined based on a total valuation of 4PX at 2.64 billion yuan.

Under the agreement, Cainiao may elect to pay the consideration payable on exercise of the 10 per cent option either in cash or by procuring a transfer of shares held by its related companies in QSI to SingPost, subject to compliance with applicable laws and regulations.

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Both put options may be exercised together or individually within six months after the loan capitalisation between 4PX and Cainiao is completed. Singpost said it will put up an announcement on the Singapore bourse if these options are exercised.

Based on the unaudited consolidated financial statements of SingPost for the six months ended Sep 30, 2022, the book value attributable to QSI’s 19.75 per cent equity interest in 4PX is S$85.3 million.

If the put options are both exercised, the disposal exercise will add about S$16.6 million to Singpost’s retained earnings.

Assuming the options were exercised on Mar 31, 2022, the pro forma effect of the disposal would raise net tangible asset per SingPost share to 27.7 Singapore cents, from 27.2 cents.

There is no change to the earnings per share as the gains from the disposal exercise will be transferred to retained earnings instead of net profits, since SingPost does not equity account for any of the profits or losses of 4PX.

Alibaba, which has a majority interest in Cainiao, also has a 14.5 per cent interest in SingPost and a 34 per cent interest in QSI.

SingPost shares were down 2.7 per cent, or S$0.015, at S$0.55 as at 4.35 pm on Friday.