SingPost has terminated the employment of its CEO, CFO and CEO of its international business unit as they allegedly failed to exercise due diligence and breached their duties in relation to a whistle blowing report alleging manual entries of certain delivery codes. Maybank IB notes that the company has already settled with the customer involved which will not be material to its FY25E NTA and EPS and the customer's contract has been renewed.

The house believes that the end-game remains unchanged as the strategic review and monetisation of non-core assets was driven by the board. The Australia business sale will likely proceed as the board believes the divestment is the best option for shareholders. It also thinks this will be an opportunity to accumulate SingPost shares on weakness.

Manual entries of certain delivery codes
Three managers with various operational responsibilities in its international business operations allegedly manually performed/approved updates of delivery failure status codes for parcels SingPost had agreed to deliver even though no delivery attempt had been made and which lacked supporting documents to avoid contractual penalties with one of its largest
customers. The 3 managers were terminated earlier in 2024 and a police report has also been made. A settlement has been agreed and paid to the customer which is not material to SingPost's current year NTA and EPS.

Board-driven initiative – End-game unchanged
In July 2023, the board initiated a strategic review with a view to enhancing shareholder returns and ensuring that SingPost is appropriately valued. It has identified a list of assets and businesses that are non-core to its strategy which can be monetised to recycle capital. The house believes that the proceeds from the Australia business will be returned to shareholders
after paring down debt. Maybank IB also expects more asset sales going forward like Famous Holdings, SingPost centre and its post offices. We expect potentially up to SGD0.86/sh of dividends in the next 2 years.

Accumulate on weakness
Despite the termination of key management, Maybank IB said it believes that the roadmap to return shareholder value remains unchanged as it is board-driven and shareholders could potentially receive up to SGD0.86/share if all its assets are monetised. We think the downside risk is now limited and maintain a conviction BUY on SingPost for its asset monetisation story.