Welcome to this week’s edition of top stock market highlights.
Singapore Post (SGX: S08)
Singapore Post, or SingPost, received a whistleblowing report earlier this year relating to its international e-commerce logistics parcels business.
The report alleged that there were manual entries of certain delivery status codes to avoid contractual penalties under the agreement.
An investigation by SingPost’s group internal audit, along with an external legal counsel and a forensics service provider, uncovered serious breaches of the group’s code of conduct.
As a result, three managers were earlier terminated and a police report was also made.
The customer was informed of this incident and a settlement sum was paid to this customer, with its business not materially affected as the contract has since been renewed post-settlement.
In the course of the investigation, external professional advisers were engaged to review and assess this matter independently of management.
Following the completion of the review and assessment by the law firm, SingPost commenced disciplinary proceedings against group CEO Vincent Phang, group CFO Vincent Yik, and the CEO of the Singapore Post (SP) International Business Unit (IBU) ops Mr Li Yu.
All three were found to be grossly negligent and had failed to perform their duties responsibly and reliably.
SingPost terminated the employment of its group CEO, group CFO and the CEO of its SP IBU Ops with effect from 21 December 2024.
A new group CEO will be appointed in due course.
In the interim, Isaac Mah, the current CFO of the group’s Australian business, will take over as the new group CFO.
Mr. Simon Israel, chairman of the board, will also provide increased guidance and oversight of the senior management leadership team.
OUE REIT (SGX: TS0U)
OUE REIT entered into an agreement with an unrelated third party to divest its entire stake in Lippo Realty (Shanghai) Limited, which owns a 91.2% stake in Lippo Plaza.
The sale consideration amounted to RMB 1,917 million.
Based on Lippo Plaza’s net property income (NPI) of RMB 94.6 million for 2023 and the agreed property value of RMB 1,680 million, the net property yield is around 5.7%.
This divestment is in line with the manager’s proactive asset management strategy to optimise its portfolio and improve income resilience.
Han Siew Khim, CEO of the manager of OUE REIT, remarked that Lippo Plaza is a non-core asset that contributed just 6.6% of total portfolio revenue as of September 2024.
Lippo Plaza’s shortening lease and its vintage building specifications have negatively impacted its valuation and competitiveness.
This sale is expected to be completed by the end of this year and proceeds are estimated to be approximately S$318.2 million.
These proceeds will be used to either pare down debt, redeem convertible perpetual preferred units, be used for share buybacks, or distributed as capital distributions to unitholders.
CDL Hospitality Trusts (SGX: J85)
CDL Hospitality Trusts, or CDLHT, has made its maiden foray into the purpose-built student accommodation (PBSA) sector in Liverpool in the UK.
The hospitality trust purchased a piece of freehold land comprising an operational PBSA asset (Benson Yard) and a vacant land adjacent to the property, for around S$63.9 million.
The PBSA opened in February 2023 and is equipped with 404 beds along with amenities such as a private dining area, sky lounge, multi-purpose cinema, and gym.
The vacant site has a planning consent for a 144-key hotel but CDLHT will conduct further feasibility studies to determine its best use and returns.
The REIT believes that Benson Yard will deliver incremental base rental income which will contribute to a more diversified and balanced income profile for its portfolio.
The asset is also located in an excellent area with high-quality amenities and is within walking distance to Liverpool’s main universities, prime retail areas, and transport nodes.
CDLHT will enjoy a pro-forma distribution per stapled security (DPS) accretion of 1.3% based on signed leases for the academic year 2024/2025.
Benson Yard has an NPI yield of 5.6% and is not fully stabilised yet, implying that there is the potential for upside in future academic years when the property has gained better reputation and attracted higher brand awareness.
This acquisition will be financed wholly with debt and CDLHT’s post-transaction gearing will be 40.2%, leaving the trust with a debt headroom of S$636.5 million.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
