What Investors Should Know About Singapore Post Limited’s eCommerce Business
Singapore Post Limited (SGX: S08), or SingPost, is a mail and logistics company, organised into three major segments of Mail/Postal, Logistics, and Retail & eCommerce.
The company has recently reported its second quarter result for the year ended June 2018 (2Q FY17/18). In this article, I will share a few points about the latest performance of the eCommerce business.
Source: SingPost 2Q FY17/18 Result Presentation
From the above, we can see that SingPost categorised its eCommerce business into three parts, namely, TradeGlobal, Jagged Peak and SP eCommerce.
Overall, we can see that this segment delivered a flat quarterly revenue as compared to last year. Yet, operating profit improved from a negative $6.8 million last year to a negative $2.9 million this quarter.
Revenue for TradeGlobal declined due to the loss of its two large customers while Jagged Peak saw increased revenue due to higher volumes and addition of new customers.
In terms of outlook, the company provided the following:
“In eCommerce, the Group has acquired technologies, customers and market knowhow which enables SingPost to scale its integrated solutions by offering an omni-channel experience that will drive volumes onto its logistics network.
TradeGlobal is executing on a turnaround business plan. While business and cost initiatives are being put in place to improve performance, TradeGlobal is not expected to be profitable for the financial year ending 31 March 2018.”
In other words, investors might see growth from this segment as SingPost scales its integrated solutions. However, TradeGlobal could be a drag on earnings.