Stock Name: POS
Company Name: POS MALAYSIA BHD
Pos Malaysia Bhd
(Aug 24, RM3)
Maintain buy at RM3 with fair value of RM4.12: POSM's 1HFY11 revenue and core net earnings of RM591 million and RM70.63 million were slightly above our and consensus estimates, representing 53% of our and consensus' FY11 forecasts. The strong earnings were bolstered by resilient mail revenue, the group's major revenue contributor (63% of total revenue in 2010).
Though core earnings were down 47% quarter-on-quarter due to seasonal factors (mail volume tends to increase in 1Q owing to Employees Provident Fund statements and so on), it surged 37.5% year-on-year (y-o-y) and 86.1% year-to-date (YTD) in 1HFY11, thanks to the domestic tariff hike effective July 1, 2010 and its transformation initiatives.
POSM recorded commendable revenue growth of 25% y-o-y. Its core mail business was the most profitable division. Revenue and operating profit jumped 27% and 36.4% y-o-y'' on the back of the domestic tariff hike, which resulted in higher margins.
Its courier business, PosLaju ' with the largest market share domestically (25% of total market share) ' saw an 18% y-o-y rise in revenue and 17% jump in operating profit owing to better route optimisation and delivery beats.
Retail grew by 7% and we believe it will see steady growth via its tie-ups with banks. Overall operating profit soared 107% YTD, owing to the domestic tariff hike and the benefits reaped from the group's transformation programme.
We like POSM's strong management team and efforts to bring the company in line with international best practice. We are positive on its business, especially the retail business following the tie-ups with RHB Bank Bhd and Malayan Banking Bhd to offer shared banking services (SBS), and potentially Bank Muamalat and UniAsia Insurance. These will boost POSM's retail segment given that SBS should bring in high margins.
With earnings in line, we reiterate our 'buy' call on POSM with an unchanged fair value of RM4.12 based on sum-of-parts valuation. We are still waiting for POSM's new major shareholder to announce plans to revamp its business model. We believe it will redevelop the five pieces of land owned by the national postal services provider. ' OSK Research, Aug 24
This article appeared in The Edge Financial Daily, August 25, 2011.
Company Name: POS MALAYSIA BHD
| Research House: OSK | Price Call: BUY | Target Price: 4.12 |
Pos Malaysia Bhd
(Aug 24, RM3)
Maintain buy at RM3 with fair value of RM4.12: POSM's 1HFY11 revenue and core net earnings of RM591 million and RM70.63 million were slightly above our and consensus estimates, representing 53% of our and consensus' FY11 forecasts. The strong earnings were bolstered by resilient mail revenue, the group's major revenue contributor (63% of total revenue in 2010).
Though core earnings were down 47% quarter-on-quarter due to seasonal factors (mail volume tends to increase in 1Q owing to Employees Provident Fund statements and so on), it surged 37.5% year-on-year (y-o-y) and 86.1% year-to-date (YTD) in 1HFY11, thanks to the domestic tariff hike effective July 1, 2010 and its transformation initiatives.
POSM recorded commendable revenue growth of 25% y-o-y. Its core mail business was the most profitable division. Revenue and operating profit jumped 27% and 36.4% y-o-y'' on the back of the domestic tariff hike, which resulted in higher margins.
Its courier business, PosLaju ' with the largest market share domestically (25% of total market share) ' saw an 18% y-o-y rise in revenue and 17% jump in operating profit owing to better route optimisation and delivery beats.
Retail grew by 7% and we believe it will see steady growth via its tie-ups with banks. Overall operating profit soared 107% YTD, owing to the domestic tariff hike and the benefits reaped from the group's transformation programme.
We like POSM's strong management team and efforts to bring the company in line with international best practice. We are positive on its business, especially the retail business following the tie-ups with RHB Bank Bhd and Malayan Banking Bhd to offer shared banking services (SBS), and potentially Bank Muamalat and UniAsia Insurance. These will boost POSM's retail segment given that SBS should bring in high margins.
With earnings in line, we reiterate our 'buy' call on POSM with an unchanged fair value of RM4.12 based on sum-of-parts valuation. We are still waiting for POSM's new major shareholder to announce plans to revamp its business model. We believe it will redevelop the five pieces of land owned by the national postal services provider. ' OSK Research, Aug 24
This article appeared in The Edge Financial Daily, August 25, 2011.
No comments:
Post a Comment