SingPost logistics business faces stiff competition

Logistics' profits down 1.2% in 2Q.

In 2QFY17, SingPost (SPOST)'s operating profit for the logistics segment declined 1.2% to $154.1m on the back of lower revenue amid a global economic downturn as well as costs incurred in relation to the Regional eCommerce Logistics Hub.

UOBKayHian observes that there is increased competition in the logistics space, where Famous' revenue was impacted (-8% yoy) by depressed freight rates and lower volumes while Quantium Solutions (-5% yoy) faced heightened pricing pressures in the e-commerce logistics space.

Nevertheless, the research house notes that they are hoping that collaboration with Alibaba will muscle SPOST e-commerce logistics capabilities in the region and strengthen its network.

"We continue to project a 3-year revenue CAGR of 15% for the logistics segment," it said.