Singapore Post Limited: Core operations remain weak amid swift strategic moves

Core operations remain weak  

Singapore Post reported a sharp decline in revenue and underlying earnings for FY2025/26 as weakness in international eCommerce logistics and structural declines in letter mail volumes continued to weigh on operations. 

For FY25/26, SingPost's revenue fell 23.1% year-on-year to S$376.1 million, driven mainly by a 55.2% decline in international logistics revenue and continued weakness in domestic letter mail volumes. 

Operating profit dropped 68.9% year-on-year  to S$11.8 million.  Underlying profit remained under pressure, declined 57% year-on-year to S$10.7 million. 

Underlying profit excludes exceptional items and derecognition of aged trade payables.  The derecognition of aged trade payables is an one-off item amount of S$38.1 million.  This item does not have any cash flow effect.

Ongoing cost streamlining failed to lift operating margin, which declined 4.6 percentage point to 3.1% in FY25/26. 

Logistics & letters

Domestic logistics proved more resilient. Domestic revenue slipped by only 6.0% year-on-year to S$217.7 million as higher parcel volumes partly offset continued declines in traditional mail. 

Domestic eCommerce volumes grew 8.1% year-on-year, while domestic letter mail volumes declined 13.5% year-on-year. 

International revenue fell 55.2% year-on-year to S$85.8 million as cross-border eCommerce volumes fell sharply amid rising competition, changing tariff policies, removal of de minimis exemptions in certain markets and geopolitical uncertainty.

International eCommerce delivery declined amid intense competition, by 57.3% year-on-year to 3.5 million kg. Management explained that as consumers are expected a shorter delivery time, affecting SingPost’s effectiveness to compete.  

Property assets  

The property business remained a bright spot. 

Revenue from Property Assets increased 2.0% year-on-year to S$80.7 million while operating profit rose 0.5% year-on-year to S$45.2 million, supported by occupancy rates above 99% at SingPost Centre. 

Property assets contributed more than 20% of group revenue but almost four times the operating profit generated by the logistics business.

Separately, the divestment of the 10 HDB shophouses has completed on 30 Jun 2026.   The properties are sold for cash of S$55.5 million. 

Operating cash flow is significantly lower

SingPost generated S$47.6 million of operating cash flow before working capital changes in FY25/26. This was lower than the S$181.7 million recorded in the previous year following the divestment of several businesses.

After working capital movements and taxes, the group recorded a modest operating cash outflow of S$12.3 million.

Investing activities generated S$78.0 million of inflows, largely from proceeds from the disposal of subsidiaries, associated companies, and its investment in 4PX.

Meanwhile, financing cash outflows amounted to S$232.0 million, driven primarily by the S$202.6 million special dividend paid to shareholders, distributions to perpetual securities holders and lease repayments.

Maintain financial flexibility

Cash and synthetic deposits stood at S$603.8 million as of 31 March 2026, while total liabilities fell to S$615.1 million from S$782.9 million a year earlier.

After accounting for borrowings, SingPost maintained a net cash position of S$254 million despite paying a special dividend of S$202.6 million during the year. This provides management with flexibility to continue investing in automation and strategic initiatives. 

The financial flexibility allows SingPost to invest prudently to strengthen the core operations.   

The S$100 million Medium Term Notes will mature in March 2027. The Company is evaluating its capital management options with the objective of maintaining a robust liquidity position while optimising its debt maturity profile.

Strategy review updates

Management continued to streamline the business aggressively during FY2025/26. These strategic shifts aim to transform the group into a leaner business centred on domestic logistics, postal services, and property assets.

Key initiatives included:

• Divesting non-core businesses. 

SingPost sold the freight forwarding business for approximately S$180.9 million and realised a gain on disposal of S$6.5 million. SingPost also divested several Quantium Solutions entities.

• Completing the unwinding of cross-holdings with Alibaba. 

SingPost completed the mutually agreed unwinding of its minority cross-shareholdings with Alibaba in Quantium Solutions International (QSI) and 4PX, simplifying its investment portfolio and improving strategic flexibility.

• Investing S$30 million in automation to improve parcel sorting productivity. 

To improve efficiency and support future growth, SingPost is investing S$30 million in automation at its Regional eCommerce Logistics Hub. The investment will triple small and medium parcel sorting capacity from 100,000 to 300,000 parcels daily, increasing total throughput capacity to 400,000 parcels per day.

• Expanding customer touchpoints to more than 2,500 islandwide. 

SingPost is repositioning its post office network from a traditional mail service model towards a broader logistics and customer access platform. The nationwide network of around 2,500 touchpoints provides convenient parcel collection and self-service options, while also supporting cross-border shipping through integrated duty and tax collection services.

• Increasing domestic postage rates by 10 cents from January 2026. 

The January 2026 domestic postage increase provides SingPost with additional support to maintain its universal postal service obligations in an environment of rising costs and declining mail demand.

At the same time, the group is modernising its operations through investments in AI and automation as part of its transition towards a technology-enabled logistics platform. These initiatives are expected to reduce aggregate cost-to-serve by approximately 10% over the longer term.

• Pursuing new cross-border partnerships to rebuild international volumes. 

SingPost also expanded its partnership with FedEx, increasing the number of FedEx parcel acceptance points from 6 to 43 locations across Singapore.

The partnership strengthens SingPost's position in cross-border logistics by leveraging its nationwide network to provide customers with more convenient international shipping options. Under the arrangement, customers can drop off FedEx parcels at participating SingPost locations, where shipments are consolidated and transferred daily to FedEx for international delivery.

The collaboration reflects SingPost's strategy of monetising its physical network and customer touchpoints while enhancing its cross-border logistics capabilities without significant incremental capital investment.

Going forward, SingPost plan to take further steps to strengthen the fundamentals. 

In its Logistics & Letters business, the group is investing in AI and automation to lower costs, with a target of reducing cost-to-serve by more than 10% over time. At the same time, it plans to expand into adjacent logistics services such as warehousing and value-added solutions by leveraging its delivery network and last-mile capabilities.

For the Post Office Network, SingPost aims to improve profitability by optimising its network footprint, increasing rental income from post office properties, and developing new revenue streams.

Within Property Assets, SingPost intends to retain SingPost Centre in order to benefit from the long-term development of the Paya Lebar precinct.  To enhance the asset yields, SingPost will potentially undertake some asset enhancement initiatives (AEIs) for SingPost Centre. 

Supporting these initiatives is a disciplined approach to capital management, with SingPost maintaining financial flexibility to fund investments while targeting a dividend payout ratio of 30% to 50% of underlying net profit.

Dividend per share

SingPost proposed final dividend of 0.06 Singapore cents per share.  In addition, a supplemental dividend of 0.41 Singapore cents per share was  approved at the Annual General Meeting.  The ex-dividend date for the final and supplemental dividend is set on 3 August 2026.

Including the FY25/26 interim dividend of 0.08 Singapore cents, the total FY2025/26 dividend is 0.55 Singapore cents per share.

The ordinary dividend remains aligned with SingPost's policy of paying out 30% to 50% of underlying net profit. 

Based on the last traded price at S$0.36 (10 July 2026), SingPost offers a dividend yield of 1.5%.  Excluding the supplemental dividend, the FY25/26 dividend is 0.14 Singapore cents per share. 

As the company makes new investments to strengthen SingPost’s core operation, we expect dividend yield to remain depressed.   

Maintain at Neutral and target price revised to S$0.40

Maintain at Neutral with target price revised to S$0.40. 

At S$0.35, SingPost trades at FY2027E Price-to-book 0.7x and FY2027E EV/EBITDA 12x. 

Our target price is revised to S$0.40, derived by sum-of-parts of the business components. Our target price is based on FY2027 earnings and applying a 30% discount to reflect SingPost’s current scale of operations compared to peers and considering the lack of visibility. We believe the company is on the right track but improvement is expected to be gradual.   

Key risks include earnings are higher trade tariffs and macro uncertainty that inhibit global trades and cross-border movements of goods.

Related links:

• Singapore Post Limited share price history and share price target
• Singapore Post Limited history and dividend forecasts

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