Monday (July 2): Singapore Post’s recently released FY18 annual report showed an improvement in alignment of directors’ remuneration with company’s performance and in its debt structure, net gearing and interest cover among others.
After a major board revamp over the past one and a half years following shareholder criticism over certain acquisitions and a subsequent special audit, the boards’ remuneration structure is better aligned with the company’s underlying performance, says Maybank Kim Eng.
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“As a percentage of underlying net profit, board remuneration fell by 0.06% in FY18. In absolute terms, board remuneration fell 14% y-o-y and was down 27% from FY16 levels. Also the ratio of independent director in the board increased y-o-y to 60% from 50%,” says Maybank Kim Eng analyst John Cheong.
SingPost debt structure at end FY18 also improved. Total indebtedness fell 33% y-o-y while current borrowings dropped and EBITDA interest cover rose to 9.8x from 8.2x in FY17. The majority of borrowings now is also long-term, providing some protection against a rising interest rate environment. Maybank’s sensitivity analysis has indicated every 1% increase in interest rate will reduce FY19E EPS by 0.3%.
Maybank’s Cheong also notes there is potential for several non-core assets to be divested in its view, especially the self-storage businesses that “have little synergy with SingPost’s core business”. Also, its HQ, SingPost Centre, could be divested after the recent refurbishment.
As at 11.19am, shares in SingPost are trading at $1.26.
