company analysis: singpost
DESCRIPTION
A company analysis on Singapore Post Limited.TRANSCRIPT
Company Analysis:
Presented by: Ng Wen YingWang Si Jie (Jessie)Wu ShanCao Ya Jie
Singapore Post Limited
ABOUT•Commonly abbreviated as SingPost•Associate company of Singapore Telecommunications Limited•Singapore’s designated Public Postal Licensee•Provides 1) Mail 2) Logistic 3) Retail services
An Introduction and Analysis Approach
APPROACH1: Economic analysis for Postal industry2: Postal industrial analysis 3: SingPost Business analysis4: SingPost Financial analysis
Economic AnalysisMacroeconomic Environment and its implications
Indicators Trends ImplicationsGDP per Capita
•Risen 20% over the last 5 years
Economy is growing and is generally healthy macro environment factors unlikely to have adverse effects on company’s financial health
Inflation %
•Stable and within the range of 2% - 3%
Tamed inflation level operation cost wouldn’t be expected to surge if all else is kept constant.
Economic AnalysisMacroeconomic Environment and its implications
Indicators Trends ImplicationsInterest Rate
•Currently 0.17% and on a upwards rising trend
Rising interest rates and the impending high interest rate environment cost of capital might increase
Labour Cost
•Labour cost has rise moderately in past 5 years
Rising labour cost implies that businesses like SingPost that are labour intensive will be expecting higher labour cost higher operating expenses
Economic AnalysisMacroeconomic Environment and its implications
Indicators Trends ImplicationsPopulation
•Increased from around 4 million to 5.4 million
Growing population=Bigger market & demandBetter businessORMore delivery points and collection pointsHigher operating cost
Housing Stock
•Total housing stock increased from 700k to 1.2mil
Increasing number of housing stock Increasing number of delivery points higher operating cost
Economic AnalysisTrends in the Postal Economy – GLOBAL PERFORMANCE
Source: UPU Postal Statistics
- Total traffic: 368.4 billion- 2011 declined 3.7%
Letter Business
- Total traffic: 6401 million- 2011 rose 2.1%
Parcel Business
Global Postal Consumption vs GDP growth
Economic AnalysisTrends in the Postal Economy – REGIONAL PERFORMANCE
No. of LETTER posted/capita 2012
Source: UPU, Bern, Oct 2013
LETTER - Traffic Performance
No. of PARCEL posted/capita 2012
PARCEL - Traffic Performance
Economic AnalysisConclusion on Postal Economy
Sources of Financial income for Postal Operators 2011
• Letter-post volume has been on the decline bringing global postal consumption down despite a growing GDP
• Letter-post only contributes 20% of total income for operators• Postal network is increasingly used to transport goods (parcels)• We expect postal operators to make changes to their business model by taping on
their network and the development in e-commerce to remain competitive • It is also worth noting that the Asia Pacific region has been the least affected by the
decline in letter business and is also one of the better performer in parcel business
Industrial Analysis Porter’s 5 forces model
Industrial AnalysisSingPost Business Overview
SingPost has three main business areas:
1. Mail Business2. Logistics Business3. Retail and e-Commerce Business
SingPost monopolizes the mail business in Singapore (only Public Postal Licensee)
Revenue By Business
Industrial Analysis
The below analysis (+ / -) will be done from the Industry Player’s point of view:
Suppliers’ Power and Buyers’ Power
Suppliers’ Power (-)
- Large number of suppliers (+)- Low Switching cost for suppliers (-)- Limited choices in different suppliers (-)- Low supplier service differentiation (+) [differs only in destination & duration &
capacity]- Suppliers have high impact on cost (-) [traffic cost of postal industry is high]
e.g. Freight service providers
Buyers’ Power (+)e.g. Users of Postal services (Online shop owners etc.)
- Large volume of buyers (+)- Little substitute services available (+) [service differentiation low]- Low switching cost (-) [no binding obligation]- High buyer information availability (-) [transparent fee structure]- Low price sensitivity (+) [price inelastic, rigid demand]
Industrial Analysis
The below analysis (+ / -) will be done from the Industry Player’s point of view:
New Entrants and Substitute products
New Entrants (+++)- High capital requirements (+)- Economies of scale in the industry (+)- Extensive delivery network (+)- License needed for mail postage business (+)- Low technology protection (-)
Substitute Products (+)- Few substitute service (+)- New IT (email)- Change in supply chain structure (less reliance on logistics)- Insourcing (in-house logistics)
Industrial AnalysisCompetitive rivalry
The below analysis (+ / -) will be done from the Industry Player’s point of view:
Competitive Rivalry (-)- Relatively large numbers of competitors (-) [7000 logistics companies in Spore 2010]- Low switching costs between firms- Monopoly in mail postage (+)- Distribution of market share (DHL, FedEx, TNT, UPS, SingPost)- High exit cost (-)
Business AnalysisObjective: Visions, Value
Vision•To be a regional leader in e-commerce logistics and trusted communications
Values•A SingPost culture that embodies the 5Ts - Trust, Total Customer, One Team, Top Execution and Transformation.
Objective
Business AnalysisHistory Development
Historical Timeline• In 1819, foundation of SingPost in Singapore by Sir Stamford Raffles.• In October 1858, became a separate department from the Marine Office.• In 1949, linked with the Postal Department of the Federation of Malaya under a Malayan Postal Union
Agreement.• On 8 January 1966, admitted to the Universal Postal Union.• 1 January 1967, became a fully autonomous body.• In 1982, merged with the then Telecommunication Authority of Singapore.• In 1992, became the first Public Postal Licensee, and a subsidiary of Singapore Telecommunications.• On 13 May 2003, listed on the mainboard of the Singapore Exchange.
• Earned the honour of being the only company to have won the EMS Cooperative Certification Award by the Universal Postal Union (UPU) for our Speedpost Worldwide Service every year since 2001.
Awards
Business AnalysisRecent Acquisitions
Business AnalysisBusiness Segments
SingPost provides an integrated suite of mail, logistics and retail solutions in Singapore and the Asia Pacific region. It has three main business areas: Mail Business, Logistics Business, Retail Business.
Business AnalysisRevenue Breakdown
Business AnalysisStrategic Direction: To diversify its Postal business throughout the 5 pillarsthrough…
Mail: continue to deliver quality services & improve efficiency•Invest $100m in letter mail service enhancement.(sorting machinery, eg. mechanised rate increase from 85% to 95%; 3 wheels fleet, increase 25% mail carrying capacity for higher productivity ) Retail & Financial: Enhance customers experience to cater for growing trend in online shopping•More touchpoints (eg. new post office & automated services)•Mobile app•More services(Saturday delivery, 24/7 call center) Logistics: focus on development international e-commerce, logistic platform•Scale up investment in logistic infrastructure•Strategic acquisition to strengthen end to end ecommerce logistic value chain (Alibaba. F.S Mackenzie)•Focus on customer services operation excellence (innovation on self-help web booking tool, eg. ezy2ship)
Strategy
Business Analysis
• Domestic mail volume expected to remain on downtrend with operating cost rising
• Continued growth on e-commerce in Asia Pacific is expected leading to growing parcel volume
• Total development expenses will continue to rise as SingPost invest in developing e-commerce related capacities
• Non-postal business and revenue from both domestic and regional market is expected to continue growing for SingPost
Outlook
Business Analysis
Mail Business•Monopoly in SingaporeLogistics Business•DHL, FedExpress, TNT ,UPSRetail & Financial Services e-Commerce•eBay, Taobao, Amazon
Competitors
Business AnalysisStructure
Strategic Alliances Subsidiaries• Datapost• Quantium Solution• Famous Holdings• Lock+ Store• Novation• Samplestore.com• SP eCommerce
• 4px World Express Co. Limited• 7-Eleven,Inc. (Food Retail)• Co-operative Bank Ltd.• DBS bank Ltd. (Diversified Banks)• eBay Inc. (Internet Software and Services)• HDFC Bank Ltd. (Diversified Banks)• Japan Post Holdings Co, Ltd. (Air Freight and Logistics)• Lucasfilm Ltd.LLC (Movies and Entertainment)• Marvel World,Inc• MasterCard Incorporated. (Data Processing and
Outsourced Services)• New Zealand Post Limiter (Air Freight and Logistics)• PayPal,Inc. (Data Processing and Outsourced Services)• Prudential Singapore Holding Pte. Limited• Standard Chartered Bank Singapore. (Diversified Banks)• Standard Chartered PLC. (Diversified Banks)• State Bank of India. (Diversified Banks)• Tun Foundation Bank• United States Postal Service. (Air Freight and Logistics)
Financial AnalysisHorizontal Analysis for Income Statement
Financial AnalysisHorizontal Analysis for Income Statement
Reasons for decrease in profit
• industry challenges• weaker business
environment• increased cost pressures
(labor and rent)• investment in its operating
capabilities, people, IT and operations.
Financial AnalysisHorizontal Analysis for Cash Flow Statement
• Steady increase in operating cash flow• Increase in cash outflow in financing activities was mainly due to the repayments of
the S$300 million bond and S$15.5 million
Financial AnalysisVertical Analysis fir Balance Sheet
Financial AnalysisDividend Policy
Dividend Policy
• Singapore Post has a stable dividend policy of paying fixed dividend per share for past 7 years.
• Barring unforeseen circumstances, the Group will endeavor to pay a minimum annual dividend of 5 cents per share.
Financial AnalysisRatio Analysis
The End
Presented by: Ng Wen YingWang Si Jie (Jessie)Wu ShanCao Ya Jie