Singapore Post shares yesterday jumped the most in more than two years after Alibaba Group Holding's stake increase in the postal delivery company gained approval from Singapore regulators.
The stock surged by as much as 6.9 per cent to $1.625, the biggest increase since May 2014, and closed 4.6 per cent higher at $1.59.
Alibaba, China's largest e-commerce company and the second-biggest investor in SingPost, will raise its stake to 14.4 per cent from 10.2 per cent with a further investment of $187.1 million. The transaction is expected to close by February, SingPost said in a statement on Thursday.
Alibaba also completed an investment of $86.2 million in SingPost's logistics unit Quantium Solutions International, the Singapore company said, adding that the two partners are "confident in the long-term value of collaborating".
"This is a positive development for SingPost, as one of the uncertainties for the stock is now put to rest," OCBC Investment Research analyst Low Pei Han wrote in a report yesterday.
"Looking ahead, the group's dividend policy is likely to be revised downwards, but more importantly, time is still needed for integration and synergies for substantial earnings growth following the group's earlier acquisitions."
The tie-up may help boost SingPost's delivery volumes. Alibaba expects to surpass the record US$14.3 billion (S$20 billion) in sales it made on Singles' Day last year by rolling out new activities like virtual fashion shows and augmented reality games to entice shoppers.
The event, which starts in two weeks, will feature celebrities including Katy Perry, who serves as Alibaba's "global ambassador".
The Singles' Day promotions may lead to higher international volumes for SingPost, UOB-Kay Hian analysts wrote in a note yesterday.