Stock Name: POS
Company Name: POS MALAYSIA BHD
Research House: OSK
Pos Malaysia Bhd
(March 7, RM3.05)
Maintain buy at RM3.08 with revised target price of RM4.12 (from RM4.45): Pos Malaysia's analyst briefing was centred on the latest 4Q results and progress made on its transformation master plan, which highlighted the impact to volume following the postal tariff hike, measures to mitigate the impact of declining mail volume as well as its efforts to reduce operating costs through effective delivery beat management. All in, we gather that Pos' transformation plan remains on track given that all its 2010 key performance indicators had been achieved.
While we expect mailing volume to continue to decline, the retail contribution from its tie-ups with banks will offset the overall impact. Revenue growth is projected to be on an uptrend as the company would see the full effects of the tariff hike in FY11.
Furthermore, we expect overall margins to continue to expand as the impact of the postage will offset the full year effect of the 2010 salary hike.
However, owing to spiralling costs on assumption of higher jet fuel and staff costs, we are trimming our earnings forecasts by 17.1% for FY11 and 13.3% for FY12.
The unveiling of its strategic partner is expected to be announced in the next one to two months as the deadline of March 15 for bidding draws near.
Potential relaxation of the use of its lands bank under the purview of the Postal Bill appears to be progressing well as the draft Bill will be tabled in Parliament this month. We expect the proposed amendments related to relaxation will go through as it would make more economic sense for the government to optimise the potential value of the landbank.
We maintain our 'buy' recommendation on Pos, but have downgraded our target price to RM4.12 following the downward revision in earnings (from RM4.45).
We continue to value Pos on a sum-of-parts basis to capture the near-term earnings impact, where we apply a 14-time PER (from 13 times historical forward PE with inclusion of the strategic partnership catalyst premium), and the value of its five pieces of land not under the purview of the Postal Bill and its net cash. Maintain buy. ' OSK Research, March 7
This article appeared in The Edge Financial Daily, March 8, 2011.
Company Name: POS MALAYSIA BHD
Research House: OSK
Pos Malaysia Bhd
(March 7, RM3.05)
Maintain buy at RM3.08 with revised target price of RM4.12 (from RM4.45): Pos Malaysia's analyst briefing was centred on the latest 4Q results and progress made on its transformation master plan, which highlighted the impact to volume following the postal tariff hike, measures to mitigate the impact of declining mail volume as well as its efforts to reduce operating costs through effective delivery beat management. All in, we gather that Pos' transformation plan remains on track given that all its 2010 key performance indicators had been achieved.
While we expect mailing volume to continue to decline, the retail contribution from its tie-ups with banks will offset the overall impact. Revenue growth is projected to be on an uptrend as the company would see the full effects of the tariff hike in FY11.
Furthermore, we expect overall margins to continue to expand as the impact of the postage will offset the full year effect of the 2010 salary hike.
However, owing to spiralling costs on assumption of higher jet fuel and staff costs, we are trimming our earnings forecasts by 17.1% for FY11 and 13.3% for FY12.
The unveiling of its strategic partner is expected to be announced in the next one to two months as the deadline of March 15 for bidding draws near.
Potential relaxation of the use of its lands bank under the purview of the Postal Bill appears to be progressing well as the draft Bill will be tabled in Parliament this month. We expect the proposed amendments related to relaxation will go through as it would make more economic sense for the government to optimise the potential value of the landbank.
We maintain our 'buy' recommendation on Pos, but have downgraded our target price to RM4.12 following the downward revision in earnings (from RM4.45).
We continue to value Pos on a sum-of-parts basis to capture the near-term earnings impact, where we apply a 14-time PER (from 13 times historical forward PE with inclusion of the strategic partnership catalyst premium), and the value of its five pieces of land not under the purview of the Postal Bill and its net cash. Maintain buy. ' OSK Research, March 7
This article appeared in The Edge Financial Daily, March 8, 2011.
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