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When Singapore Post Limited (SGX:S08) released its most recent earnings update (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Singapore Post’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not S08 actually performed well. Below is a quick commentary on how I see S08 has performed. Check out our latest analysis for Singapore Post
Commentary On S08’s Past Performance
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend enables me to examine many different companies in a uniform manner using new information. For Singapore Post, its latest earnings (trailing twelve month) is S$22.33M, which, against last year’s figure, has dropped by a large -87.45%. Given that these values are somewhat short-term, I’ve computed an annualized five-year figure for S08’s net income, which stands at S$139.58M This doesn’t seem to paint a better picture, since earnings seem to have steadily been declining over the longer term.
What could be happening here? Well, let’s take a look at what’s going on with margins and if the entire industry is experiencing the hit as well. Revenue growth in the past couple of years, has been positive, nevertheless earnings growth has been declining. This implies that Singapore Post has been growing expenses, which is harming margins and earnings, and is not a sustainable practice. Scanning growth from a sector-level, the SG logistics industry has been enduring severe headwinds over the past twelve months, leading to an average earnings drop of -50.81%. This is a substantial change, given that the industry has been delivering a positive rate of 7.97%, on average, over the last five years. This shows that any recent headwind the industry is facing, it’s hitting Singapore Post harder than its peers.
What does this mean?
Though Singapore Post’s past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that experience a prolonged period of decline in earnings are going through some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a signal of a structural shift, which makes Singapore Post and its peers a higher risk investment. I suggest you continue to research Singapore Post to get a better picture of the stock by looking at: