SINGAPORE (Sept 20): Maybank is switching its stance on Singapore Post (SingPost) from “sell” to “buy” with a higher target price of $1.77 from $1.29 previously to reflect lower new acquisition and execution risk, as well as upward revisions to the stock’s medium-term profit growth outlook.
In a Tuesday report, analyst John Cheong says the research house’s previous concerns about the postal service provider’s corporate governance issues, falling stock prices and more are “gradually being addressed”. These include:
A ‘more supportive’ board
As a result of the new measures taken since SingPost’s Simon Israel stepped in as chairman in May this year – which includes review of dividend policy and separation of duties between the board and management – Cheong believes the board is now more supportive of the group’s incoming CEO, for which the position is expected to be filled by end-2016. The analyst also expects “a more focused strategy” to build SingPost’s core mail and regional logistics capability with the arrival of a new CEO.