Wednesday, August 10, 2016

Random thoughts: All that I did not know about Singpost

This is a random thought series. No numbers or valuation call. 

I was rather intrigued by Singpost business, creating an Eco-system to feed  into logistic. Singpost aim to be an e-commerce logistic player, many forgot the "logistic" behind the equation. But here goes, what I didn't know, or cannot confirmed till now. I was very intrigued reading the annual reports of Amazon, and EBay, and Internet rocket, the owner of Lazada which Alibaba bought a stake in.

1)B2B, C2C, B2B4C? = SMS?
 In E-commerce there is B2B, C2C concept etc. Alibaba's Taobao is kinda of C2C, consumer to consumer. But I guess the Giants like EBay, Amazon are all BC2BC all rolled into one (my own understanding). Isn't alibaba too? Consumer and Business, the line is not that clear if u ask me.  

Singpost claim it is B2B4C, it makes me think which company doesn't provide the logistic support, either through in-house capabilities or through 3-party, so the 4C is hardly important, in my sense.

2) e-commerce and marketplace
 I didn't know there is a difference. Ecommerce, you owned the inventories and if successful, u have a higher margin of return, marketplace u just get everyone in as the middleman, so you need volume (much more than e-commerce) to bring in the tilt. Singpost, Taobao is defintely more/ all marketplace 

3) e-commerce start-up keep burning cash for a long time

I read that Taobao was cash burning for a long time, not sure if it has already turn the table. But Internet-rocket has a stable of online companies, almost all are unprofitable in the 3-5 years in operation. Lazada, food panda, and all its subsidiaries etc, while market leaders, are all unprofitable. 

My own understanding is this:

Ecommerce is the bait, the many money spinners are actually something else. Alipay for Alibaba, Logistic for Singpost, Venture capitalists for Internet rocket.

5) Beside scale, products and consumers' experince count

Amazon annual reports are really good read. I always think of scale as a crucial factor in ecommerce. 

They talk about speed of delivery, in-house products differentiation (shows), etc. 

It also talk about Coporate culture, which is really enlightening, taking risk etc. The "consumer experince" part is not something I keep hearing when I read about Singpost. It seem they are more focus on scale and variety of products.

6) omni channel marketing 
Jagged peak omni channel marketing technology is touted as one of the reason  why it was acquired by Singpost. I just realize it means merging of online-offline retail experince through multiple e-platforms.

It's an important piece if the SP mall at paya lebar is to be successful.

Conclusion:

I am writing to summarize what I read so that I can crystallize my thoughts. If my info is inaccurate, I stand to be corrected. 

I mean I now see Singpost through more facets other than "Alibaba's Magic", which is the much touted info by analysts after its corporate governance issue.

I also have more opinions on the reports by analysts instead of taking them wholesale. For one, I do not think Alibaba will give up Quantium Solutions through Lazada. I think "consolidation" is going to be theme of big players, the smaller players will hope to cash in by being "absorbed"

I am not saying that Alibaba's investment will go through, but I don't think the main determining factor is the competition of Lazada

The acquisitions of 2 small US e-commerce companies also made more sense now. US is one the biggest e-commerce market in terms of product offerings, it cannot be a missing link in Singpost's offering regardless of how stiff the competition is.

But I think the acting CEO is stretching it when he said it allowed Asia pacific customers access to US and vice versa. I don't really think US consumers need anyone else beside EBay, Amazon to get anything from the rest of the world. (With the exception of China perhaps) 



6 comments:

  1. I noted that singpost has been acquiring companies past 2 years.

    SingPost’s chairman Simon Israel has said it may take years before the company’s acquired business, TradeGlobal, contributes materially to its bottom line.

    There is also potential dividend cuts in near term, they will be having a dividend policy review soon. With the acquisition of Lazada, there has been a “change in partnership dynamics”, How this will turn out remains to be seen.

    ReplyDelete
  2. Solace,

    My own take is they will not change the dividend too drastically. Why?

    Assume they cut dividends by half, it's going to be badly affecting the share price, which go bad for the investment ...

    Also, it cannot really be offset by "growth" since they mention they are not going to do more acquisitions for the next 2-3 years

    Will they do it? I don't think so. Maybe revert back to 6 cents dividends. But drastic cut, nope.

    As for Jagged peak and trade global, I don't think they need to contribute to bottom line anytime soon.

    The KPI should be the merchandise value they generate to keep logistic booming. That is the crown jewel. I've value create in logistic must offset the loss in generating volume ...

    Just my 2 cents worth, not vested. But thanks, if dividends does get cut to 6 cents, it would be a good time to "get in"

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  3. I believe they are aligning the dividend to be inline with their earning. 6 cents a share for dividend should not exceed its EPS. Hopefully, it will be comfortable for singpost.

    Have you tried calculating the intrinsic value or attempt to do valuation on singpost?

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  4. HI Solace,

    2 years ago, I did a DCF analysis. It work to be about $1.25 if we want 20% MOS.

    But I am no longer number crazy, I am trying to determine the possibility of growth and how much it is...

    I am not going to tinker with the growth model, but looking at the possibility of growth...

    Looking at the numbers, I do think 10-20% grow is possible if execution if smooth for 2017-2018

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  5. Shhh...
    Ecommerce is the bait, the many money spinners are actually something else. Alipay for Alibaba, Logistic for Singpost, Venture capitalists for Internet rocket.

    ReplyDelete
    Replies
    1. SMK,

      LOL,
      No worries, people see what they want to see.

      Shh

      Delete