S&P says SingPost’s plan to dispose of US e-commerce assets is credit positive

Singapore Post SAM machines; taken at SingPost Centre in March 2018.

Singapore Post’s plan to divest its U.S. e-commerce subsidiaries TradeGlobal and Jagged Peak is “mildly credit positive,” S&P Global Ratings said in a statement on Monday.

“In our view, SingPost’s divestment would lift its consolidated EBITDA (earnings before interest, tax, depreciation and amortization). It would also free up resources and management attention for the Asia-Pacific operations, where the company has a more natural competitive advantage than in the U.S.,” S&P said.

“At this stage, we do not expect SingPost to realize material disposal proceeds,” S&P said. “We believe TradeGlobal and Jagged Peak still operate at breakeven at best.”

SingPost acquired the two U.S. e-commerce businesses in 2015, and as early as fiscal 2017, it posted a S$185 million impairment charge on its investment in TradeGlobal, which it acquired for US$167 million, or S$236 million, S&P noted. TradeGlobal posted a S$26 million loss in fiscal 2017, when it had been expected to post a profit of S$9 million, the ratings agency said.

For the nine months ended 31 December, SingPost reported EBITDA of S$166 million, with the e-commerce segment posting an operating loss of S$34 million, S&P said, adding it estimated TradeGlobal and Jagged Peak accounted for most of the losses.


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