The EPS Mirage: Why Singapore Post's Surge Hides a Fragile Foundation
4min read The markets are buzzing about Singapore Post’s (SGX: SPOST) stellar Q1 2025 earnings, where EPS surged over 100% on the back of postal rate hikes and strategic moves. But here’s the truth investors must face: this isn’t about sustainable growth—it’s a one-time fireworks show. Let’s dissect why the “beat” is masking deeper operational cracks and why this stock is a hold or sell until management proves it can fix its core issues.
The Australia Divestment: A One-Time Lifeline, Not a Lifesaver
The star of SingPost’s earnings report is the S$302 million gain from selling its Australian business—a move that single-handedly boosted full-year net profit to S$245 million. But here’s the catch: that’s a one-time gain, not recurring revenue. Strip out the divestment and fair-value property gains, and the underlying net profit plunges 40% to S$24.8 million. Worse, the second half of FY2024/25 actually ended in a net loss of S$0.5 million.
The core business—the Singapore postal division and international logistics—is struggling. While Singapore’s postal division turned profitable in Q1 (thanks to rate hikes), e-commerce parcel growth is anemic (2.9%), and letter mail volumes are cratering (-8.1%). Meanwhile, cross-border logistics volumes dropped a staggering 23.8%, and freight forwarding is still reeling from post-pandemic normalization. This is not a foundation for long-term growth.
Cost Cuts and Automation: A Necessary Gamble with Uncertain Payoffs
SingPost is pouring S$30 million into automating its Singapore Regional E-Commerce Hub, aiming to boost parcel capacity. It’s also integrating its Australian assets and slashing costs through operations like the FMH-CouriersPlease merger. But here’s the rub: these moves are desperate attempts to offset declining revenues in key segments.
The freight forwarding division, once a cash cow, is now a drag, and international logistics revenues fell 11.2% annually in FY2024/25. Even the Australia divestment review—hyped as a potential IPO or sale—is a gamble. If it flops, SingPost could be stuck with a non-core asset that’s already underperforming.
Jim Cramer’s Rule #1: Cost cuts can’t mask a shrinking revenue base forever. Without a turnaround in international operations or a Singapore postal division that can grow organically (not just hike prices), these moves are just buying time.
Special Dividends: A Sweet Temptation with Bitter Aftertaste
The proposed 9 cents per share special dividend, funded by the Australia sale, is a tantalizing carrot for income investors. But here’s the truth: this dividend isn’t recurring. It’s a one-off payout from a non-core asset sale—a classic “monetize and move on” strategy.
Meanwhile, the company’s net debt soared 196% to S$410 million, partly due to deferred payments for the Border Express acquisition. That debt load will need to be serviced long after the Australia gain fades. Relying on special dividends to prop up investor sentiment is a sign of weakness, not strength.
The Bottom Line: Hold or Sell Until Core Metrics Stabilize
SingPost’s Q1 EPS surge is a siren song—a distraction from its core operational failures. Until we see:
1. International logistics revenues stabilize (not just cut to “profitable segments”),
2. Singapore postal margins expand beyond rate hikes (e.g., e-commerce volume growth above 5%), and
3. Debt levels come down without relying on asset sales,
this stock remains a hold at best. If management can’t deliver on these, sell now—before the music stops.
Final Warning: The logistics sector is in a global slowdown, and SingPost’s lack of pricing power in key markets (outside Singapore) means it’s highly vulnerable. This isn’t a “buy and forget” stock—it’s a red flag until fundamentals turn. Stay vigilant!
