SINGAPORE (Oct 10): SingPost on Monday announced the launch of SingPost Centre’s retail wing, a new one-stop lifestyle destination in Singapore’s east, after two years of redevelopment and costing $150 million.
The Paya Lebar facility houses Singapore’s General Post Office and tenants offering a digital shopping experience. Among the shopping options, NTUC FairPrice features the scan-and-go system, where pre-registered customers can scan items as they shop before paying at dedicated counters.
In addition, the outlet features an experiential corner where shoppers may try out new products using augmented and virtual reality applications.
The General Post Office features automated services that provides 24/7 access to postal and other essential services. This includes SingPost’s largest POPStation of 143 lockers, and SAM kiosks augmented with a self-service posting box for registered articles.
After the redevelopment, the five-storey mall has a gross floor area of 269,000sf, which is double the size of the original, as well as a net lettable area of 178,000sf. The company has announced that the mall had 80.4% committed occupancy as at Sept 30 with major tenants such as Fairprice, Golden Village, and Kopitiam.
In a Tuesday report, analyst Sachin Mittal says SPC’s opening is in line with the house’s forecast where it is assumed the mall will open progressively in 2H18 and full rental income contribution for the mall will kick in from FY19.
“We estimate SPOST’s rental income to rise to $17 million in FY19 versus only $6 million in FY18F on the back of this,” says Mittal.
But with shares trading at 20.6 times FY19 forward earnings, Singapore Post will need more than the new SPC to justify a 10% jump in its stock price, adds the analyst.
SingPost will first need to stabilise its mail segment’s operating profit to $141 million, which requires growth in international mail to fully offset decline in higher-margin domestic mail and deliver a sharp recovery in logistics and e-commerce’s operating profit to $42 million by FY19 versus $10 million in FY17.
Another key risk is impending changes to terminal dues which will take effect from January although little details known at this stage.
DBS has a “hold” on the stock with a $1.26 target price.
As at 11.29am, shares in SingPost are up 1 cent at $1.27.