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Hot stock: SingPost slides 4.3% after TradeGlobal writedown
SHARES of Singapore Post fell 4.3 per cent, or 6 Singapore cents, to S$1.33 on Monday as analysts downgraded the mail carrier following disappointing results and a major impairment.
In reporting its results for the fourth fiscal quarter ended March 31, SingPost on Friday evening said that it incurred a S$185 million writedown on TradeGlobal after the unit took on a S$25.8 million loss during the quarter. SingPost also cut its dividend payout to half a cent, a fifth of what it paid out the previous year.
The company said it has launched a review of the circumstances surrounding the acquisition of TradeGlobal, and whether sufficient due diligence was carried out.
On Monday, OCBC Investment Research analyst Low Pei Han downgraded the stock to "sell" on valuation grounds.
"With the rebasing of expectations of the group's e-commerce business, it seems that a longer than expected time would be required for a significant growth in earnings from this segment," the analyst wrote. "At the same time, a change in the group's dividend policy has also dimmed its appeal as a dividend stock."
CIMB Research also downgraded the stock to "hold" from "add".
"While this was a disappointing set of results that proved some challenges ahead for Singpost, its cash flow generation remains strong," CIMB analyst Jessalyn Chen wrote. "We see an earnings turnaround in FY18 after two years of declining profits, helped by the opening of SPC retail mall in H2. But with H1 still challenging, we downgrade to 'hold'."