Singapore Post

[Musicwhiz]

Their financial expenses will increase significantly as a result of the perps. It remains to be seen if they can maintain their consistent dividend track record.

[KopiKat]

Their financial expenses will increase significantly as a result of the perps. It remains to be seen if they can maintain their consistent dividend track record.

4.25% of $350Mil = $14.875Mil
Net Profit FY12 = $142M
Dividend Payout = ~84.4%

So, good chance they can maintain the Div = 6.25ct/year unless they do something massively silly with the huge cash eg. buy loss making biz...

[CityFarmer]

I witness the magic of Perpetual securities on net asset of a company, the SingPost. The SingPost net asset magically goes from ~332 Mils to ~660 Mils, PB ratio goes from 6.71 to 3.15 without any "real" increase in asset, but a perpetual loan of ~347 Mils.

What a power perpetual security!

I wonder what they're planning to do with the war-chest (Cash = $617M). Their previous acquisitions had been small and they may be preparing to do some bigger acquisition?? I worry they are going to do something silly..

If they don't deploy it soon to make some earnings accretive acquisitions, their EPS are going to suffer the moment they have to start paying the coupon for their PERPS..

I assume large part of the cash will be used to pay off the S$300 million 10-year bond issued in April 2003.

The remaining cash of ~317 Mils is still huge

[KopiKat]

I assume large part of the cash will be used to pay off the S$300 million 10-year bond issued in April 2003.

Use 4.25% PERPS to redeem 3.13% Bond?? If interest rate remains low, IMO, they'll most likely issue another 10-year bond next year.

[yeokiwi]

I assume large part of the cash will be used to pay off the S$300 million 10-year bond issued in April 2003.

Use 4.25% PERPS to redeem 3.13% Bond?? If interest rate remains low, IMO, they'll most likely issue another 10-year bond next year.

Use the 4.25% PERPS to buy the 6% PERPS of Hotel Properties..haha
Or maybe, Singpost decides to tear down its Paya lebar building and build a mega mall!!!

[KopiKat]

I assume large part of the cash will be used to pay off the S$300 million 10-year bond issued in April 2003.

Use 4.25% PERPS to redeem 3.13% Bond?? If interest rate remains low, IMO, they'll most likely issue another 10-year bond next year.

Use the 4.25% PERPS to buy the 6% PERPS of Hotel Properties..haha
Or maybe, Singpost decides to tear down its Paya lebar building and build a mega mall!!!

The Peya Lebar one is their SPC (Singapore Post Centre), I thought already done up and earning rental income? I was thinking more of their Bukit Panjang one which is a standalone building, maybe can tear down and build shoe-box units of condo with an integrated SingPost PO right at the entrance or they can combine with the neighbouring plot of land (occupied by a Kindergarten now) for a much bigger project...

[shanrui_91]

Use the 4.25% PERPS to buy the 6% PERPS of Hotel Properties..haha
Or maybe, Singpost decides to tear down its Paya lebar building and build a mega mall!!!

The Peya Lebar one is their SPC (Singapore Post Centre), I thought already done up and earning rental income? I was thinking more of their Bukit Panjang one which is a standalone building, maybe can tear down and build shoe-box units of condo with an integrated SingPost PO right at the entrance or they can combine with the neighbouring plot of land (occupied by a Kindergarten now) for a much bigger project...

Wonderful idea, I like the buying 6% perps especially. Those that bought from singpost will feel like they have been cheated.

is it worth it if they can do a share buy-back to buy back their 6% yield stock?

There is already a junction 10 beside it which has 388 apartments. Perhaps they can change it into some gaming or tuition place?http://www.junction10.com.sg/index.aspx?key=about-mall

[CityFarmer]

I assume large part of the cash will be used to pay off the S$300 million 10-year bond issued in April 2003.

Use 4.25% PERPS to redeem 3.13% Bond?? If interest rate remains low, IMO, they'll most likely issue another 10-year bond next year.

I was expecting SingPost to issue another bond to redeem the S$300 million 10-year bond due next year, but they did it with a PERPS instead.

IMO, There are pros and cons with PERPS vs bond, it may not be a bad idea to redeem a bond with a PERPS, instead of another bond.

SingPost has another $200 million 10-year Fixed Rate Notes issued in March 2010. IMO, i do not expect another bond been issued in near future.

[KopiKat]

There is already a junction 10 beside it which has 388 apartments. Perhaps they can change it into some gaming or tuition place?http://www.junction10.com.sg/index.aspx?key=about-mall

Gaming Centres (internet type) + Tuition Centres likely gives one of the worst rental yields. The best rental yields are achieved for F&B biz. Junction 10 used to be 10-Mile Junction and I saw it degenerate over the years with the tenants turning from retail and F&B to schools (music, tuition,..etc.) + Sheng Shiong (low cost operator), as the crowd dwindled. Now, the newly rejuvenated Junction 10 has mostly F&B tenants plus Tennery (SOHO style condo) which may provide some critical mass for their biz. Having a SingPost integrated mall + condo next to it plus a sheltered aircon link would be a definite plus for that whole area!

I was expecting SingPost to issue another bond to redeem the S$300 million 10-year bond due next year, but they did it with a PERPS instead.

Let's see if you are right. For me, reading what the aggressive new CEO is saying in their Press Release makes me nervous that he's likely going to use up all the cash for some massive ego boosting acquisitions...

[CityFarmer]

I was expecting SingPost to issue another bond to redeem the S$300 million 10-year bond due next year, but they did it with a PERPS instead.

Let's see if you are right. For me, reading what the aggressive new CEO is saying in their Press Release makes me nervous that he's likely going to use up all the cash for some massive ego boosting acquisitions...

I share the similar concern. I am looking at them like a hawk looking at its prey.