SINGAPORE Shares in Singapore Post (SPOS.SI) fell as much as 6 percent on Monday to their lowest in more than a year after the firm said it was conducting an in-depth review of an acquisition of a U.S. e-commerce firm for which it took a significant impairment charge.
SingPost reported an 87 percent plunge in net profit for the year ended in March after it took an impairment charge of S$185 million for TradeGlobal, nearly 80 percent of the S$236 million it agreed to pay for acquisition.
TradeGlobal "significantly underperformed the business case which supported the investment", and that it was "experiencing operational and structural challenges," SingPost said in a statement late on Friday.
SingPost, which counts China's e-commerce giant Alibaba Group (BABA.N) and Singapore Telecommunications (STEL.SI) among its top shareholders, said its board had formed an independent committee to conduct a thorough review of the deal.
It has also engaged a legal counsel to assist it on the review and appointed advisory firm FTI Consulting to assess the financial and commercial due diligence involved.
"Given the fact that this is an acquisition in the last two years, people are quite worried about the other acquisitions," said Andrew Chow, an analyst with UOB Kay Hian. Since 2014, SingPost has bought into several firms, including New Zealand's Famous Pacific Shipping (NZ) Ltd and Australia's Couriers Please Holdings Pty Ltd to boost its logistics capabilities.
SingPost has previously faced questions over its corporate governance and a probe by the Accounting and Corporate Regulatory Authority (ACRA) into possible breaches of Singapore's Companies Act. Several high-level executives have also left the company over the last two years.
The company has since put in place measures to address some of the corporate governance concerns, including adopting a directors' code of business conduct and ethics and policies governing their conflicts of interest.
UOB's Chow said SingPost was "probably a 2018-2019 recovery story in terms of earnings" since some new businesses still needed to be integrated and the company's new CEO, who joins next month will take some time to settle in.
Shares in Singapore Post fell to as low as S$1.29, the lowest since January 2016.
($1 = 1.4035 Singapore dollars)
(Reporting by Aradhana Aravindan; Editing by Miyoung Kim and Miral Fahmy)