09-Oct-2006
DBS Vickers said it has cut its target price for Singapore Post to 1.12 sgd from 1.24previously on the view that the company could lose up to 30 mln sgd or 15 pct of market share in the domestic basic mail service (BMS) by the year to March 2011 if Singapore fully liberalises its BMS market from April next year.
But the brokerage expects limited competition with the liberalisation, saying security concerns over the sharing of the masterdoor key for Housing Development Board letterboxes could dissuade the entry of new players in downstream mail delivery.
"We believe that new players would (only) enter the upstream activity of mail collection, and (that they will) target business customers in a selected coverage," DBS Vickers said in a note.
Competition from global players is also likely to be limited as these players are expected to focus on the multi-billion-dollar European market rather than the smaller Singapore market of about 200 mln sgd, it added.
Hence, DBS Vickers said it is keeping its "buy" call on the stock.
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