Saturday, January 7, 2017

Singpost: 2nd catalyst and 3rd catalyst

Singpost has found a replacement CEO. 

This is a CEO with operating expertise in logistic and freight forwarding. A timely change as it move to synergied its accquistions. With this CEO, I hope this pace of accquistions will stop over the next few years. 

The second catalyst has happened. Market is not excited, but at least not disappointed. Singpost has risen intandem with the market 

The third catalyst, will be out in 2 months. Alibaba has a record sale during Nov 11. Amazon also had record sales.

If u read their analysts meeting notes, Mervin has always "hint" that the loss making accquistions in US is for the longer term, and particular the holiday season is often quoted as an opportune window for  ramped up businesses activities.

How much synergy did the alibaba and Singpost alliance bring? Let's explore the following possibilities:

1) Top line grow in high double digit figure and bottom line is in low single digit QoQ, YOY

2) Top line grow in high double digit figure and bottom line is flat.

3) Top line grow is single digit or low double digit and bottom line is flat or reducing 

4) Top line and bottom line both deteriorate. 

Market will only take scenario 1 or better (both high double digit growth) as a positive calayst.

Scenario  2 will most probably cause some downward pressure but I believe it won't be a heavy sell-off. 

A sell-off will most probably happen if scenario 3 and 4 happens.

Personally, If 3) and 4) happens, it's time to say bye bye. Why?

The Singpost logistic hub which is "supposed to" be more productive is up and running, the capex for this and also the Singpost Mall is mostly spent. 

Demand side, Alibaba is doing brisk business globally and SEA is growing too, these revenues should flow through Singpost's avenues. 

If 3) and 4) happens, I can already predict their explanations. They will be 

1) NP affected by loss of revenue from SP mall which will be online soon (who dun know, stop harping)
2) Their acquisitions are for the long term, and their costs management is US entities has ballooned. 
3) Need more investment to able synergy to happen (huh? Then when will u start to harvest? ) 

Personally, if the fourth quarter is no-go, due to whatever reasons, I think I will start to doubt their execution capabilities.

I am penning down so that I dun give myself excuses when it is time to cut loss/ take profits. 

If scenario 1 or 2 does materialize, then I will go on to wait for SP mall to contribute. The final catalyst.... 

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