February 14, 2011

POS - OSK Research maintains Buy on Pos Malaysia, unchanged target price of RM4.45

Stock Name: POS
Company Name: POS MALAYSIA BHD
Research House: OSK

KUALA LUMPUR: OSK Research is maintaining its BUY call on Pos Malaysia with an unchanged target price of RM4.45 based on a sum of parts valuation.

It said on Monday, Feb 14 the potential review of the Postal Land Act and announcement of the potential buyer of the 32.2% stake are the catalysts for Pos Malaysia.

The Edge weekly reported Feb 14 has been set as the deadline for bidders to submit their offers for the 32.2% stake in Pos Malaysia. There are likely to be four to five consortia bidding for the Government investment arm's stake in the national postal

services provider. Names that have cropped up are Tan Sri Syed Mokhtar's consortium, Sapura Group, which has tied up with Deutsche Post, SCOMI MARINE BHD [] with an European Postal group, and according to sources, two other groups led by individuals are also likely to put in bids for Pos Malaysia.

While it is uncertain how much the bidders will have to fork out for Khazanah's stake in the company, at a closing price of RM3.35 per share last Friday, the 32.21% stake would be worth as much as RM579.54m.

OSK Research said judging from Khazanah's objective in divesting its 32.21% stake in Pos Malaysia, it appears that the key criteria for the potential buyer would be one with strategic fit to transform Pos Malaysia into an entity that would mirror the postal

transformation trend seen globally, and is 51% owned and led by a Malaysian company.

'The buyer should also possess strengths in areas such as the retail and courier segments other than conventional postal services. The new strategic shareholder must also be acceptable to Pos Malaysia's other shareholders i.e. Permodalan Nasional Bhd, the second largest shareholder in Pos Malaysia with a 7.32% stake, Aberdeen Asset Management (7.03%), Skim Amanah Bumiputera (6.15%) and the Employees Provident Fund, with 5.91%,' it said.

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