Singapore Post

[CY09]

Hi yohowslife,

Interesting write up you have on Singpost. Yes I agree at 27.4x P/E, its quite high. At 27.4x P/E, ppl are expecting Singpost to grow its earnings a lot (about 80% in 4 - 5 years) to match its 15.4x P/E. So the question as a value investor: Is this valuation awarded by Mr. Market undervaluing /fair /overvaluing the company?

In this case, my personal opinion is that Mr. market has overvalued Singpost. For Singpost to grow 80% earnings in 5 years on the story of e-commerce growth is simply not possible. In addition, its mall business is going to be challenged greatly in the paya lebar area. LKH and UOL have recently added new malls at Paya Lebar area. This increases the no of malls in Paya Lebar from 3* to 5.

*The first 3 malls (including Singpost's) are all old and run down. Singpost was the dominant kid in the block because it had a NTUC outlet and Kopitiam (the only food court in the area). Paya Lebar square now has food outlets, Giant and a food court; thus is a big challenger to Singpost.