The recent quarter of SingPost results is dismal. Net profits dropped by 27% yoy. Besides the traditional culprits of declining mail businesses, the main drag on profits came from the $10.2m loss suffered by its newly acquired US- based e-commerce company TradeGlobal.TradeGlobal is undergoing structural changes in its business as it lost two key customers ie one filed for bankruptcy and the other switched to in-source sourcing of its freight operations.
SingPost acquired Tradeglobal to the tune of $236m not too long ago under the previous CEO Wolfgang Baier.I do not know the rationale for the acquisition as I am not vested in Singpost after divesting them at around $2 sometime back when I am not convinced with its bloated valuation vis-a-viz revenue/profits.My interest only rekindled recently when Alibaba executed it second block purchase of SingPost shares to become its largest shareholder.
I am expecting a large writeoff of TradeGobal on SingPost books to the tune of close to $200m in the coming quarters. the worst for SingPost is yet to come.