Alibaba to Increase its Stake in Postal Organization

The Chinese E-commerce company has agreed to add to its share in Singpost to dominate the competitive market

A momentous joint project agreement signed in July last year between Alibaba Group Holding Limited and Singapore Post is yet being finalized, Singpost stated on 10^th May 2016. The Chinese E-commerce company had agreed to increase its equity share in the logistics and postal service provider by purchasing shares that equal to 5% share in the Singaporean organization.

Both organizations have since then stretched  the long-stop date on the contract from 31^st May to 31^st October as  "longer time is required to fulfil the conditions precedent", Singpost stated on 10^th May 2016 when it issued its final quarter results. With the extension, the timeframe has been stretched. The timeframe was previously extended 2 times one in February and other in November.

In 2015,the online retailer had also agreed to purchase a 34% share in the logistics division of the organization Quantium Solutions International. The finalization of the contract will be done by 31^st October, in the wake of new commercial opportunities emerging from related investments, the postal company stated.

It recorded a final quarter net profit of $105.4 million, up by 196.% from the earlier year due to one-off divestment gains. In the March quarter underlying profit declined by 20.1% to a figure of $31.8 million, mainly due to a decrease in rental income as the Singapore Post Centre mall re-development started in the year’s third quarter and higher financial expenditures.

In the last quarter of 2015, Earnings per share increased from a revised 1.49 cents to 4.36 cents, whereas the price of net asset value per share has increased from 68.37 cents to 72.26 cents in the end of the first quarter in 2015.

The postal organization recorded a net profit of $248.9 million for the entire year, an increase by 57.9% from the earlier year, as yearly revenue grew by 25.2% to a figure of $1.15 billion. Now overseas revenue contributes to 43.9% of the turnover of the group, up from a contribution of 32.5% in 2015.

After the closure of trading, the announcement of earnings was done. On 10^th May 2016, The group ended 0.5% lower at $1.585. As per reports by Nikkei, Singpost has hired Simon Israel as heir of leaving chairman Lim Ho Kee, who had provided his services to the organization for a decade and 3 years, as questions are being raised regarding the corporate governance practices of the company.

Since 2003, Lim has worked as the chairman. He was initially hired as the director of Singpost in 1998. The long tenancies of the board members of Singpost faced criticism by experts of corporate governance, after CEO  Wolfgang Baier abruptly announced his resignation in Dec 2015. Clarity lacks regarding the reasons for the resignation of Baier led to a rumor that battle with Lim was behind an abrupt move. The resignation caused the shares of the postal group to tumble.