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Broker's take: DBS maintains 'hold' on SingPost with launch of retail mall


DBS kept its "hold" call on Singapore Post (SingPost), citing expectations that the opening of its landmark building's retail wing will lift rental income in FY2019.

DBS maintained its target price of S$1.26 for the stock, which was trading at 1.265 as at 11.09am on Tuesday.

SingPost launched the retail wing of SingPost Centre on Monday after two years and about S$150 million of redevelopment works, offering double the previous retail space, a gross retail floor area of 269,000 square feet, and 178,000 of net lettable area.

SingPost said that the mall had 80.4 per cent committed occupancy as at Sept 30, with major tenants such as Fairprice, Golden Village and Kopitiam.

The mall should open progressively in the second half of FY2018 and see full rental income contribution kick in from FY2019, DBS said. In the medium term, a divestment of the shopping mall could act as a catalyst.

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However, SingPost needs to stabilise the mall segment's operating profit to around S$141 million and deliver a sharp recovery in logistics and e-commerce operation profits to S$42 million by FY2019, in order for DBS to justify more than 10 per cent upside from the stock's current price .

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