Since collapsing to a 10-year low in December 2018, SingPost share price managed to crawl its way back to the $1.00 mark. But it seems that the recovery of SingPost share price could be a false dawn in the making as the management dropped a big hint in its recent financial report that a massive impairment to the carrying value of the US businesses is on the way.
For SingPost, impairments are assessed based on the full financial year results. The last time that SingPost recorded significant impairments was in FY2017 which saw SingPost suffered impairment charges of a massive $208.6million for TradeGlobal. The huge impairment charges walloped SingPost share price upside down back then. Thus, SingPost share price could be poised for another challenging time.
The recent revival in SingPost share price should be attributed to the management’s aggressive share buy-backs. As at 21 March 2019, 13.8 million shares were purchased from open market. The share buy-backs provided critical support for SingPost share price, which would have suffered a worse fate given recent spate of toxic news on SingPost.
Taking into consideration the coming “tsunami” and the aggressive share buy-backs, investors of SingPost should brace for a roller-coaster ride and expect plenty of volatility of SingPost share price in the coming months. Nonetheless, investors should not panic over the swings in SingPost share price because SingPost has a solid balance sheet and strong operating cash flow. The business fundamentals are still sound and it is certainly not all “doom and gloom” for SingPost share price. The key to staying calm is to adopt a long-term view for this counter.
Nightmare form of SingPost share price
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