The date was 28th May 2014 when a news released from SingPost shocked the world and made every loyal SingPost shareholders the happiest lot of all. On that day SingPost announced that China e-commence giant Alibaba Group has bought a 10.35% stake of SingPost share at a price of S$1.42 a piece and that helped SingPost to raise a capital of approximately S$312.5m.
It was not the amount of capital raise that matter in that announcement but who the investor was. Without doubt the investing from Alibaba Group further affirmed that SingPost has taken a big step in transforming its business from the sunset sector of postal mails to the growing sector of e-commence. SingPost has been undergoing transformation for at least the past 5 years with the like of acquisition of Quantium Solutions, tying up with local banks to provide housing loan and basic banking services, etc. The investment from Alibaba Group is an indication of successful in the transformation and should not be the last. After Alibaba Group, SingPost did not stop there as it continued to acquire companies that helped to expand its e-commence business. Even China budget smartphone Xiaomi also tapped into its delivery services last year and the latest news of all was its proposal to redevelop the Singapore Post Centre Retail Mall. Since the news of Alibaba Group share price of SingPost also rocketed up and hit a record high of intra-day high S$2.16 on 28th Jan 2015 and closed at record high of S$2.15 on that day. The days at which it was classified as "dead stock" in which it just hovered around $1.00 were gone. Ironically, it was during those days in which I advised most of my ex-clients (when I was a Trading Representative then) to hold SingPost share for long term due to its stable dividend of 6.25 cents/share per annual and unfortunately only a selected few have bought into it while majority gave me the response of "sunset industry, stock price not moving at all, buy for what". Look like now those selective few who seek my advice are the one actually "laughing to the bank".
Personally, am very pleased the way SingPost has managed to transform its business and not because of the big paper profit I am having now (+96.67% based on S$1.985 closing on 10th Feb 2015). This further gave me the confidence in future investment that I stick to my belief (believe in SingPost can successfully transform a sunset business to a growing one) and can be rewarded.
Looking forwards, I am monitoring the growth of SingPost to see whether it could achieve a double-digit growth per annual as to me to achieve that meaning SingPost can be classified as a "growth stock" rather than an "income stock" in my portfolio. The difference between "growth" and "income" stock is investing in "growth stock" is for capital appreciation whereas investing in "income stock" is merely to get a constant stream of dividend payout. At present price of S$1.985 (as of 11th Feb 2015), if considered "income stock" it looks fairly overvalued as it only provide a dividend yield of 3.15% (with 6.25 cents/share per annual) which is totally unattractive. However, if it is able to upgrade to "growth stock" (a growth of at least 10% profit per annual), prospect that it could even raise its dividend payout, at present price, it is a different story.
Am looking forwards to and hoping that SingPost will not disappoint me to upgrade its from "income" to "growth" stock.
