POSTAL service provider Singapore Post (SingPost) on Wednesday said its wholly-owned subsidiary SingPost Group Treasury has established a S$1 billion multicurrency debt issuance programme.

 

SingPost is the guarantor, while HSBC, Singapore branch has been appointed as arranger of the programme.

 

Under the programme, SingPost Group Treasury may issue notes and perpetual securities denominated in Singapore dollars, or any other currency agreed between itself and the relevant dealer(s).

 

Net proceeds will be used for financing general working capital, corporate requirements and funding needs of the group, or such other purposes as may be specified in the relevant pricing supplement, SingPost said.

 

Separately, mainboard-listed natural rubber supplier Halcyon Agri Corp has priced its US$200 million guaranteed perpetual securities at 3.8 per cent, it said in a bourse filing late Wednesday night.

 

This comes after the company in August proposed to issue guaranteed perps in place of a rights issue.

 

The perps are guaranteed by Chinese state-owned enterprise Sinochem International Corp, which owns Halcyon Agri' s major shareholder Sinochem International Overseas.

 

If the securities are not redeemed on the first call date on Nov 18, 2025, the distribution rate will be reset on that date and every five years thereafter to a rate equivalent to the initial spread of 3.345 per cent, plus the then-prevailing five-year US treasury rate and a margin of 3 per cent per annum.

 

The securities may be redeemed at the option of the company in whole, but not in part on Oct 18, 2025 or any distribution payment date thereafter, Halcyon Agri said.

 

The perps, which have been assigned a rating of Baa2 by Moody' s Investors Service, are expected to be issued on Nov 18, 2020.

 

Net proceeds are intended to be used for operating cash flows and other fixed commitments of the group, including refinancing of its existing indebtedness.

 

DBS, China Construction Bank Corporation, Singapore branch and CMBC Securities Company have been appointed as joint global coordinators for the securities. The three, together with ING Bank, Singapore branch, have been appointed as joint bookrunners and joint lead managers for the perps.

 

SINGAPORE Post (SingPost) posted net profit of S$30.9 million for the first half of the fiscal year ended September, down 42.1 per cent from S$53.4 million in the corresponding year-ago period.

 

Earnings per share fell to 1.04 Singapore cents, down from 2.57 cents a year ago.

 

In a bourse filing on Friday, the group attributed the decline in bottomline figures to a " sharp rise" in international conveyance costs and labour-related expenses due to the Covid-19 pandemic.

 

The fall in net profit was despite a 9.6 per cent increase in revenue to S$707.8 million compared to S$645.6 million last year, spearheaded by growth in the group' s post and parcel as well as logistics segments. SingPost said this was due to strong e-commerce volume growth across the group.

 

However, the group reported increases across most of its expenses categories, which weighed on its margins. In particular, volume-related expenses rose by 26.7 per cent to S$429.2 million, in line with higher e-commerce volumes.

 

Segmentally, revenue from SingPost' s post and parcel segment rose 5.2 per cent year on year, amid a 43 per cent rise in domestic e-commerce volume growth. The group added that initiatives such as its new tracked letterbox product were well received by customers.

 

Volumes of letters and printed papers continued to decline due to electronic substitution. The group also faced higher costs with additional health and safety arrangements for Covid-19, such as housing arrangements for its Malaysian employees.

 

SingPost said its international post and parcel business' cross-border e-commerce volumes remained " largely resilient" despite a 96 per cent reduction in passenger fleet due to the pandemic. The segment' s margins, however, were eroded by higher costs due to long delays and limited cargo space.

 

Revenue from the logistics segment also rose 20.3 per cent on the back of increased e-commerce activities.

 

The property segment' s revenue fell 7.8 per cent to S$55.5 million in the period, due primarily to rental rebates provided for eligible tenants that amounted to some S$3.2 million, as well as lower receipts from car-park and atrium sales.

 

Due to the uncertain outlook, the group has declared an interim dividend of 0.5 Singapore cent per ordinary share, half that of the dividend of one cent in the year-ago period. The dividend is expected to be paid out on Dec 2.

 

SingPost chief executive officer Paul Coutts said: " Despite the strong demand for our logistics and delivery services, margins for some of our business segments have been eroded through higher costs associated with Covid-19, and we expect this to be the case for as long as the global pandemic continues.

 

" While we remain optimistic in the strategies taken to reposition ourselves for the new normal, Covid-19 continues to pose significant challenges to the operating environment for businesses."

 

Looking ahead, SingPost said its earnings and operating cashflows will continue to face headwinds from disruptions to businesses. The extent and duration of these headwinds will depend on when the pandemic eases, the group warned.

 

It added that it is carefully managing its expenses, cashflow and liquidity, and will continue to seek out opportunities to strengthen its capabilities and competitiveness in key markets.

S& P Global Ratings expects Singapore Post (SingPost) to have limited rating headroom to weather industry troubles or any business underperformance over the next one to two years after it buys a stake in Freight Management Holdings (FMH). FMH is a fourth-party Australian logistics services firm in which mainboard-listed SingPost is looking to acquire a 38 per cent stake.

 

Although S& P' s issuer credit rating on SingPost can accommodate the FMH acquisition, the debt-funded acquisition also coincides with a period of heightened earnings weakness, S& P said in its report on Tuesday. " SingPost' s margins have weakened, given that limited international air traffic during the Covid-19 pandemic has raised operating costs for cross-border delivery," it added.

 

S& P forecasts SingPost' s debt-to-Ebitda (earnings before interest, taxes, depreciation and amortisation) ratio to be pushed above 2.5 times in 2021 before subsiding to about 2.3 times in 2022. SingPost' s debt-to-Ebitda ratio was two times in 2020.

 

The credit ratings agency expects the FMH stake acquisition to be immediately earnings accretive for SingPost but said the deal will do little for the company' s subdued near-term earnings outlook. The benefit of business integration and synergies will take some time to materialise, S& P noted.

 

Based on the 38 per cent minority stake in FMH, S& P' s base case considers the potential for modest dividends from FMH of S$2-5 million annually. The deal will complement SingPost' s long-term strategy to build a second home base and enhance its existing supply chain operations in Australia, S& P said.

  SingPost said the acquisition of the $82 million stake in Freight Management Holdings fits its strategy of " focusing on opportunities in the fast-growing Asia-Pacific region" .

 

Singapore Post is looking to buy a 38 per cent stake in an Australian logistics firm for A$85 million (S$82 million) in cash.

 

It signed a conditional sale and purchase deal last Friday with shareholders of Freight Management Holdings (FMH) and a share subscription agreement for the purchase, SingPost said in a bourse filing yesterday.

 

When the acquisition is complete, SingPost unit Singapore Logistics Holdings will set up a new firm in Australia to hold its interest in FMH, which is based in the state of Victoria.

 

SingPost said the acquisition fits its strategy of " focusing on opportunities in the fast-growing Asia-Pacific region" .

 

Besides being immediately earnings accretive, the deal will allow SingPost to further develop its business-to-business-to-consumer logistics capabilities in Australia and capitalise on the growing e-commerce segment there.

 

It will also allow the company to acquire a complementary technology platform and distribution management solution, SingPost noted.

 

FMH provides integrated supply chain and distribution solutions to more than 500 businesses across Australia.

 

It is an asset-light, technology-driven " control tower" business, SingPost noted, adding: " Utilising its technology, analytics and network, FMH is able to match customers' freight profile with the optimal carrier, increasing efficiency, utilisation and profitability for both customer and carrier."

 

Mr Damian Degenhardt, who founded FMH in 2000 and is its majority shareholder as well as managing director, will continue in his role after the acquisition is completed, SingPost said.

 

It also noted that FMH has a " long-standing business relationship" with it, having been a customer of CouriersPlease, a wholly owned SingPost unit, for many years.

 

FMH and its units recorded profit before tax of A$20.3 million for the 12 months to June 30.

 

FMH and its units recorded profit before tax of A$20.3 million for the 12 months to June 30. A valuation by PricewaterhouseCoopers Securities in Australia valued the firm at between A$182 million and A$217 million as at July 31.

A valuation by Pricewaterhouse-Coopers Securities in Australia valued the firm at between A$182 million and A$217 million as at July 31. The total purchase consideration of A$85 million will be paid in two tranches.

 

The first, estimated at A$58.8 million in cash, will consist of A$28.8 million for shares from existing investors and A$30 million for the subscription of new FMH shares to be issued.

 

That will give SingPost 28 per cent of the enlarged issued share capital of FMH once regulatory approvals have been granted.

 

The second tranche is expected to take place about 12 months after the first tranche.

 

An estimated A$26.2 million will be paid to buy FMH shares from certain investors representing 10 per cent of the firm' s enlarged share capital.