Kenanga revises Pos FY2013 forecast

Stock Name: POS
Company Name: POS MALAYSIA BHD

Research House: HLG

Price Call: BUY

Target Price: 3.20

Kenanga Research has revised upwards Pos Malaysia Bhd's financial year 2013 forecast following the latter's bullish financial results for the six-month period ended Sept 30, 2012.

Yesterday, the postal services provider posted a higher pre-tax profit of RM43.73 million for the second quarter against RM42.89 million registered in the same period of 2011.

Its revenue increased to RM300.45 million from RM292.62 million previously.

For the six-month period, pre-tax profit increased to RM96.13 million from RM79.85 million in the same period of 2011 and revenue rose to RM611.76 million from RM579.85 million previously.

Kenanga Research said the six-month 2013 (6M13) results came above its expectations but were in line with consensus.

The 6M13 core net profit of RM67 million made up 48 per cent of the consensus's earnings but 65 per cent of its financial year (FY) 2013 full-year estimate, it added.

The research house has revised its FY13-14 estimates higher by 14 per cent and five per cent respectively.

"We factored in higher contribution from the courier business as well as the enhancement in the operating margin due to a higher transaction volume," it said.

Following this, Kenanga Research has maintained its "outperform" call on Pos Malaysia with higher target price of RM3.90 against RM3.70 previously.

Hong Leong Investment Bank (HLIB) also kept its "buy" recommendation on Pos Malaysia with unchanged target price of RM3.20.

"We continue to like Pos Malaysia for the potential synergistic effect arising from more tie-ups with DRB-Hicom Bhd, its undemanding valuation and relatively generous dividend payout," said HLIB.

Pos Malaysia has announced an interim gross dividend of 8.0 sen less 25 per cent tax or net dividend of six sen. -- Bernama

Stock Overview - POS - 6 Mar 2012

Stock Name: POS
Company Name: POS MALAYSIA BHD

Research House: JUPITER

Price Call: BUY

Target Price: 2.92

POS ( 4634 : 2.66 ) : Targeting 2.92

Description

Resistance : 2.92 3.10
Support : 2.60

RSI of 42
RSI is starting to stabilise

STOCHASTIC
It is on a positive divergence

TREND INDICATOR

Comment
With the downside limited to the lower trendline of 2.60, it is likely to head higher to 2.92

Trading Strategy
Buy. Stop loss is at 2.60


Source:Jupiter Securities Research 6 March 2012

Briefing Note - POS - 28 Feb 2012

Stock Name: POS
Company Name: POS MALAYSIA BHD

Research House: JUPITER

Price Call: BUY

Target Price: 3.06

POS MALAYSIA BERHAD

Takeaways
FY10 result Pos Malaysia Bhd's (POSM) FY11 revenue of RM1.17b made up 107% the estimated RM1.16b, whilst net profit of RM111.5m accounted for about 92% of full year target of RM121.6m. On a yearly basis, full year revenue of RM1.17b was 16% higher compared to RM1.02m recorded last year. Mail revenue increased by 21% to RM731.7m, thanks to the full year impact of tariff hike in FY11, despite been partly offset by a slight decrease in mail volume.

Higher expectation from holding company After DRB-Hicom took over Khazanah's stake in POSM, the holding company has higher expectation on POSM. The management guided that they are looking at double-digit yearly growth for both topline and bottomline.

Drafting on phase 2 of transformation plan The first phase of transformation plan will be ended by end of 2012. The group is working on its phase 2 of transformation plan. Given that mail division generates about 70% of its total revenue, the group is looking at direct mail business to enhance its mail evenue contribution. Direct mail is a way of advertising in which advertiser mail printed advertisements or letters to large groups of consumers. Logistics wise, POSM already has its reach to homes nationwide, and it would be an advantage for the group to explore on this business. Going forward, the group is also planning to reduce its reliance on mail business and to direct itself into the '1-stop solution concept' business model. For its non-mail segment, the group is also looking at ways to capitalise on its existing network to distribute non-mail products. For example, the group is looking at distributing products for ultilevel- marketing companies. POSM is also looking ways to cutoperational cost. The group will work with Edaran Otomobil Nasional Bhd (EON, which is part of DRB-Hicom Group) to lease vehicle. For this year, the group will spend more on its ICT infrastructure investment to facilitate its operation and increase its efficiency.

Fair Value of RM3.06. Management indicates no change in its dividend policy of minimum 35% of distribution. Pos is enjoying a higher revenue stream with the implementation of its new tariff since mid of 2010. Going forward, the group will face challenges on how to grow its revenues from both mail and non-mail segments to keep up with the expectations from new holding company. We suggest a fair value of RM3.06 for POSM, pegging valuation at a PE of 13x, comparable with its close peers ' Singapore Post Ltd listed in Singapore.


Source:Jupiter Securities Research 28 February 2012

HLIB Research 21 Feb 2012 (Affin; Pos M'sia; Notion; Traders Brief)

Stock Name: AFFIN
Company Name: AFFIN HOLDINGS BHD

Research House: HLG

Price Call: HOLD

Target Price: 2.96

Stock Name: POS
Company Name: POS MALAYSIA BHD

Research House: HLG

Price Call: BUY

Target Price: 3.20

Affin Holdings (HOLD)

Slightly Behind KPIs But Within Expectations

'''' FY12 results in line with HLIB and consensus.''

'''' 4QFY11 qoq boosted by acceleration in loans growth, recovery in NIM and non-interest income, flat overheads and normalization of tax.'' However, these were more than offset by normalization of provision. ''

'''' For FY11, the results were slightly lower than its KPIs but gross impaired loan ratio was in line.

'''' For FY12, HLIB's forecast is slightly below its KPIs albeit still projecting earnings growth.

'''' Asset quality continued to improve.

'''' Tier-1 capital and RWCAR ratios declined but still robust (where Tier-1 is pure equity).

'''' FY12-13 fine-tuned post final results with 0.6-2.3% upward revision.'' Also introduced new FY14 forecast.

'''' Maintain Hold.

'''' Target price raised to RM2.96 (Gordon Growth with ROE at 9.4 and WACC at 11.0%) from RM2.81 post FY11 results.

''

Pos Malaysia (BUY; TP: RM3.20)

In line with our expectation

'''' FY11 core net profit of RM122.2m (+25.4%) came in within our expectation at 95.1% of our forecast. Against the consensus, the results came in slightly below expectations, at 94.8% of consensus estimates. TWS Plant expects RM38m gain from this disposal.

'''' TP of RM3.20 (based on unchanged 13x 2012 EPS of 24.6 sen) maintained. We continue to like Pos Malaysia for: (1) The potential synergistic effect arising from more tie-ups with DRB-Hicom; (2) Its undemanding valuation (discount to Singapore Post's P/E); and (3) Relatively generous dividend payout.''

''

Notion VTec (HOLD)

1QFY12 Results

'''' 1Q12 revenue and EBITDA came in within our expectation due to seasonality and weather abnormalities, accounting for 17% and 18% respectively of our full-year forecasts and 17% and 16% respectively of consensus. Notion VTec also reported a net loss of RM4.8m. This is mainly due to Thai flood affects as we forecast weaker 1H12.

'''' 1QFY12: Revenue RM39.6m (-36.0% yoy, -33.9% qoq), EBITDA RM13.5m (-38.0% yoy, -44.8% qoq) and PATAMI'' 'RM4.8m (-138.7% yoy, -136.1% qoq).

'''' HDD, camera and auto revenues declined qoq by 34.6%, 46.9% and 5.9% respectively.

'''' At the same time, Notion VTec also declared a bonus Issue on the basis of 3 shares for every 4 shares held and also Free Warrants on the basis of 1 Warrant for every 4 Shares held (before the Bonus Issue) to address liquidity issue and reward shareholders.

'''' Reiterate our HOLD call on the equity with unchanged target price of RM2.03.

''

KLCI: More consolidation to Neutralize overbought position

'''' Amid fresh concern of escalating oil prices, the prevailing market consolidation phase may prolong for a little longer but any market pullbacks are likely to be transitory and fairly shallow. Immediate resistance levels are 1570, 1580 and all time high of 1597 whilst supports fall on 1550 psychological level, 14-d SMA (1547), mid Bollinger band (1539) and 30-d SMA (1532).

'''' AIRASIA's medium to long term uptrend remains intact as share prices continue to stay above the 100-d (now at RM3.60), 200-d (RM3.47) SMAs and lower Bollinger band (RM3.53). Although technical readings are showing further consolidations amid volatile markets and its high foreign shareholding, any price weakness is an opportunity to accumulate for potential rebounds later.

'''' A breakout above 50-d SMA (RM3.70) is likely to spur greater upside towards RM3.77 (upper Bollinger band), RM3.89 (50% FR) and RM3.93 (38.2% FR). More significant resistance levels are RM4.04 (23.8% FR) and 52-wk high of RM4.20. Supports are situated near RM3.47-3.67. Cut loss below RM3.47

There's Good News in The Mail

Stock Name: POS
Company Name: POS MALAYSIA BHD

Research House: OSK

Price Call: BUY

Target Price: 4.12

HLIB Research 29 Nov 2011 (Pos M'sia; Sime Darby; TdC; MRCB; IJM; YNHl; Traders Brief) (Part 2)

Stock Name: POS
Company Name: POS MALAYSIA BHD

Research House: HLG

Price Call: BUY

Target Price: 3.20

Stock Name: SIME
Company Name: SIME DARBY BHD

Research House: HLG

Price Call: HOLD

Target Price: 9.08

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: HLG

Price Call: BUY

Target Price: 2.12

Stock Name: IJM
Company Name: IJM CORPORATION BHD

Research House: HLG

Price Call: HOLD

Target Price: 5.76

Stock Name: YNHPROP
Company Name: YNH PROPERTY BHD

Research House: HLG

Price Call: BUY

Target Price: 2.73

Stock Name: DIGI
Company Name: DIGI.COM BHD

Research House: HLG

Price Call: BUY

Target Price: 3.40

Pos Malaysia (BUY '')

More tie-ups by 2012

'''' Pos Malaysia has 106 post offices furnished with RHB shared banking services to-date. It is also in the process of implementing share banking services with Maybank. Management also indicated that Bank Negara Malaysia will likely open up the possibility of Pos Malaysia working with more than 2 financial institutions soon.

'''' Pos Malaysia is still in discussion with DRB-Hicom on more potential tie-ups in 3 main areas, including: (1) Insurance services with UniAsia; (2) banking services with Bank Muamalat; and (3) DRB-Hicom's further expansion in its logistics business (in particularly, KLAS) by leveraging on Pos Malaysia's large vehicle fleet. More details will be shared in 6 months time.

'''' The launch of direct mail has been delayed to Apr 12.

'''' With the change in financial year end (from 31 Dec to 31 Mar), management indicated that decision on dividends will be delayed.

'''' 2011-13 net profit forecasts cut by 10.3-19.1% to reflect higher staff costs and higher raw material costs.

'''' TP cut by 15.8% to RM3.20 based on unchanged 13x revised 2012 core EPS of 24.6x.

''

Sime Darby (HOLD '')

1QFY12 net profit rises 72% yoy

'''' 1Q06/12 core net profit accounted for 30.5% and 29.1% of our and consensus full-year estimates. We consider the results within expectations as we expect Sime Darby's earnings to weaken in the subsequent quarters.

'''' Sime Darby introduced its FY12 headline KPIs, with a target net profit of RM3.3bn and return on average shareholders' funds of 11.5%.

'''' Management has yet to see a slowdown in its property take-up.'' This is on the back of strong take-up for its recently launched property projects.

'''' Sime Darby's heavy equipment division currently has an outstanding orderbook of RM3bn. Although a slowdown in China/Hong Kong construction sector has impaired the division's 1Q earnings (on qoq basis), management remains positive on this division, underpinned by robust mining activities in both China and Australia.

'''' Management indicated that it would not write down investment in E&O despite the pending conversion of 60m E&O ICSLS.

'''' SOP-derived TP maintained at RM9.08. ''

''

TdC (BUY '')

Better than Expected Quarter

'''' Although TdC's revenue disappoints street's estimate, 9M11 core net profit of RM72.5m (after adjustment of RM19.7m) came above expectations, accounting for 82% of our full-year forecast and 79% of consensus.

'''' 3Q11: TdC registered a revenue of RM77m (-8% qoq, -12% yoy), EBITDA of RM45.5m (+62% qoq, +112% yoy), PAT of RM40.7m (+42% qoq, +94% yoy).

'''' 9M11: TdC recorded a revenue of RM230.7m (-2% yoy), EBITDA of RM96.2m (+56% yoy), PAT of RM92.2m (+47% yoy).

'''' Estimates were fine-tuned according to deviations stated above. As a result, FY11-FY13 EPS were adjusted by +32%, +11.9% and +5.5% respectively.

'''' Maintain our Buy call with revised SOP target price of RM0.85 imputed with our DiGi target price (instead of market price, which would add 4 sen).

''

MRCB (BUY '')

3Q weighed down by construction woes

'''' MRCB's 9MFY11 core earnings surged by 79% to RM46.1m (3.71 sen/share). However, core earnings only made up of 53% and 49% of ours and street's forecasts respectively. As a result, management has highlighted that they will most likely miss their earnings target of RM90m for FY11 due to delays in the construction division.

'''' During the quarter, the construction division posted an operating loss of RM4.1m and we believe that this is due to many of its construction projects which are at the tail end coupled with the delay effects from the construction mishap for Nu Sentral project. On the other hand, the property division continued to post steady earnings, buoyed by the developments within KL Sentral, namely Lot G office towers.

'''' We slashed our earnings forecast by 3-8% for FY11-FY13 and maintain a BUY call on MRCB with a reduced TP of RM2.12 based on SOP valuation.

''

IJM Corp (HOLD '')

Half time earnings took a breather

'''' IJM posted 1HFY12 PATAMI of RM190m. However, after adjusting for EI of 'RM32m, core earnings grew by 31% to RM222m (16.28 sen/share), making up 46% and 47% ours and street's estimates respectively. We consider results to be in line as we are expecting stronger results in the 2H.

'''' Both NPE Extension (~RM1bn) and the WCE Highway (~RM4-5bn) are still pending for approval. The former has been delayed due to realignment issue whereby the highway will run behind Masjid Negara instead of the front, whereas management is still hopeful that WCE may seek closure by year-end. Overall, we believe that actual construction works may only take-off in CY2H12.

'''' Overall, IJM has an outstanding construction order book of RM3.8bn translating to ~2.4x FY11 construction revenue while property unbilled sales remained at ~RM1bn, translating to 0.8x FY10's property revenue.

'''' Although we like IJM for being professionally run, we believe that the company's fundamentals have already been reflected in its share price. Thus, we maintain our HOLD call with a lower TP of RM5.76.

''

YNH (BUY '')

Hurt By Back taxes

'''' 3Q net profit declined 1% yoy, but rose 12% qoq as Fraser Residence started to contribute to earnings.'' Overall, 9M net profit declined 14% yoy to RM68.2m, or 59% of HLIB and consensus estimates

'''' 1.5 sen interim, single-tier dividend.

'''' Our forecasts for earnings contributions for Fraser Residence and Kiara 163 turned out to be overly aggressive for FY11.'' We have accordingly reduced our forecasted earnings contribution for these two projects by 52% for FY11

'''' We have reduced FY11 net profit forecast by 19% as we adjust our progress billing timing for Fraser Residence and Kiara 163.'' With this delay in recognition, we have raised our FY12-13 forecasts by 33-49%.

'''' Nonetheless, we maintain our positive view on YNH, and raise our TP from RM2.65 to RM2.73 (maintain 40% discount to RNAV, post forecast adjustments), implying 56% upside. BUY

''

KLCI: Optimism returns but still a trading oriented market

'''' Despite the overnight jump on Wall St, we remain cautious on our market and still advocate investors to capitalize any rebounds to trim their positions or maintain a short-term trading oriented approach, given the external headwinds.

'''' Unless the KLCI is able to reclaim the 50% FR barrier (i.e. 1453), downside risks will remain with immediate supports at 1420 (38.2% FR) and 1400 pts. Further resistance levels are 1465 (mid Bollinger band) and 1478 (100-d SMA).

DIGI: Temporary base near RM3.50 levels

'''' The correction from its RM3.88 high nearly reached the 38.2% FR level (RM3.50) and we think a temporary base has been formed. If prices can continue to consolidate from here, there is a good chance that the DIGI may reclaim the RM3.65 (23.6% FR) and RM3.75 (upper Bollinger band) and possibly even RM3.88. Traders with higher risk appetite may BUY on weakness before stronger rebound set in. Cut loss below RM3.40.

HLIB Research 24 November 2011 (KLK; GenP; POS; UM Land; Notion Vtec; Economics; Traders Brief)

Stock Name: NOTION
Company Name: NOTION VTEC BHD

Research House: HLG

Price Call: HOLD

Target Price: 2.58

Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD

Research House: HLG

Price Call: SELL

Target Price: 18.79

Stock Name: GENP
Company Name: GENTING PLANTATIONS BERHAD

Research House: HLG

Price Call: HOLD

Target Price: 7.61

Stock Name: POS
Company Name: POS MALAYSIA BHD

Research House: HLG

Price Call: BUY

Target Price: 3.80

Stock Name: UMLAND
Company Name: UNITED MALAYAN LAND BHD

Research House: HLG

Price Call: BUY

Target Price: 1.61

Kuala Lumpur Kepong (SELL)

FY11: Slightly below our expectation

'''' FY09/11 core net profit of RM1,371.3m came in slightly below our expectation, at 94.1% of our full-year forecast. Against the market consensus, the results came in within expectations at 95.4% of the consensus estimates.

'''' Deviations were lower-than-expected EBIT margin at both the manufacturing and retailing divisions that more than offset lower-than-expected effective tax rate.''

'''' Declared a final NDPS of 70sen.

'''' FY09/12-13 net profit forecasts cut by 0.3% to RM1,429.3m and RM1,443.1m largely to reflect lower EBIT margin at the manufacturing division.''''

'''' TP was also lowered by 0.3% from RM18.85 to RM18.79 based on revised 14x CY2012 EPS of 134.2 sen. Downgraded from Hold to Sell as share price has run ahead of fundamentals.'' ''

''

Genting Plantations (HOLD)

9M11: Beats our expectation

'''' FY09/11 core net profit of RM1,371.3m came in slightly below our expectation, at 94.1% of our full-year forecast. Against the market consensus, the results came in within expectations at 95.4% of the consensus estimates.

'''' Genp has yet to lock in any forward sales, as it feels that supply constraint will sustain the current high CPO prices 595.7over the near term.

'''' FFB output growth guidance for 2011 is raised to 12%. For 2012, management guided for an output growth of 8%, underpinned by higher output from its Indonesian oil palm.

'''' Management is guiding for a 12% increase in 2012's production cost to RM1,150/tonne, on higher fertilizer and labour costs.

'''' Genp planted 1,015ha in 3Q11 (or 2,800ha in 9M11), and management is targeting to plant another 1,500-1,700ha in 4Q. Beyond 2011, planting target would normalize back to 10,000-15,000ha per annum.

'''' Premium Outlets is scheduled to open to the public on 2 Dec 2011.

'''' Management is targeting to launch 530 units of properties in 2012 with a total GDV of RM230m.

'''' For the full-year, management is guiding for a capex of slightly below RM300m.

'''' 2011-13 net profit forecasts raised by 7-13%to reflect: (1) Higher FFB output assumption; and (2) Earnings contribution from Premium Outlets from 2012 onwards.

'''' TP raised by 13.1% to RM7.61 (based on 13x 2012 revised EPS of 58.5 sen), to reflect higher net profit forecast.'' ''

''

Pos Malaysia (BUY)

9M11: Below our expectation

'''' 9M11 core net profit of RM97.9m (+49.4) came in below our expectation, accounted for only 68.3% of our full-year forecast. Against consensus, the results came in within expectations, at 73.2% of the consensus estimates.''

'''' ''Key deviations were: (1) Lower-than-expected other operating income; and (2) Higher-than-expected effective tax rate.''

'''' ''Earnings forecasts and TP (RM3.80 based on unchanged 13x 2012 EPS of 29.3 sen) are maintained for now, pending further update with management in the coming results briefing. ''

''

UMLand (BUY)

Making good progress

'''' 9M net profit rose 51% yoy to RM52m, in-line with our full-year estimate, due to improved performance from both the niche and township divisions.'' A 2.5 sen gross dividend was declared.''

'''' We are pleased to see them making good progress with the projects.'' Puteri Harbour's GDV has been bumped up from RM188m to RM209m, whilst their efforts to remodel Bandar Seri Alam is progressing well.''

'''' Launches have been slow this year ' only 30% of their initial RM522m target, but management have been diligently executing their game plan and we expect them to launch more aggressively next year.''

'''' FY12-13 earnings raised by 1-2% to reflect Puteri Harbour's increased GDV.'' Our TP remains at RM1.61 (65% discount to RNAV). BUY

''

Notion VTec (HOLD)

FY11 Results, Thai Flood Assessment

'''' FY11 reported net profit of RM40.1m came in below our expectation, accounting for 90% of our full-year forecast and 87% of consensus.

'''' 4QFY11: Revenue RM62m (+16.9% yoy, +1.8% qoq), EBITDA RM21.8m (+41.7% yoy, -13.0% qoq) and PATAMI RM12.5m (+54.8% yoy, +23.4% qoq).

'''' FY11: Revenue RM236.8m (+4.4% yoy), EBITDA RM92.3m (+16.7% yoy) with EBITDA margin of 39% and PATAMI RM46.8m (+24.8% yoy).

'''' HDD revenue declined 9% yoy and is offset by camera revenue which increased 19% yoy, while industrial/automotive revenue remained stagnant.

'''' Along with 4QFY11 results, the company also shared the expected financial impact of Thailand flood:

'''' To reflect lower earnings forecast, our target price is revised downward by 42.2% to RM1.49 from RM2.58 previously based on NPV of FCF based on WACC of 12.7% and terminal growth of 10%.

''

October Inflation Report

'''' The CPI growth remained stable at 3.4% yoy in October 2011, slightly higher than the consensus estimate of 3.3%, as surge in food prices (+5.7% yoy; Sep: +5.0% yoy) offset moderation in non-food prices (+2.4% yoy; Sep: +2.7% yoy).''

'''' The moderation in prices of non-food category was caused by the lapse of cigarette excise duty hike (22 sen per stick from 19 sen per stick) effected a year ago.

'''' The uptick in services inflation (+3.1% yoy; Sep: +3.0% yoy) suggests that there is still risk of subsequent rounds of inflationary pressure.

'''' We maintain our inflation forecast of 3.2% for 2011 and 3.0% for 2012. However, there is now more upside risk to our projection given the uncertainty on food supply chain and its impact on prices.

'''' The stronger-than-expected 3Q GDP growth further reinforced our view that BNM will hold the OPR steady until end-2012.

'''' Real return to savings has been running negative since April 2011, representing another constraint for BNM to switch unreservedly to growth promotion mode.

''

KLCI: The odds favour the bears

'''' Given the failure to defend the 30-d SMA (1357) and lower Bollinger band (1435) as well as bearish technical readings, KLCI is slated to head south towards the next support at 1420 (38,2% FR) and the 1400 psychological barrier. Immediate resistance levels are 1357, 1468 (mid Bollinger band) and 1480 (100-d SMA).

''

DJIA: Downside bias despite oversold slow Stochastics

'''' Following the breakdown of major supports near mid Bollinger band (11896), 100-d SMA (11636) and 11344 (50% FR), the next supports are 11222 (61.8% FR), 11k psychological level and 10847 (76.4% FR). Overall, downside risk to violate the 11k support has increased despite an oversold slow Stochastics reading. Immediate resistance levels are 11636-11896 levels.

OSK keeps 'buy' call on Pos

Stock Name: POS
Company Name: POS MALAYSIA BHD

Research House: OSK

Price Call: BUY

Target Price: 4.12

OSK Research is maintaining its "buy" recommendation on Pos Malaysia Bhd, given the group's positive synergies with DRB-Hicom Bhd and its collaboration with Bank Muamalat Malaysia Bhd.

OSK Research said in a research note today: "We maintain our earnings forecast at this juncture because we believe the group will be unveiling more collaboration efforts with DRB-HICOM going forward."

The research firm said the tie-up with Bank Muamalat and Uni-Asia Life Insurance would boost Pos Malaysia's retail service and it would leverage on DRB's Kuala Lumpur Airport Services (KLAS) to enhance its PosLaju courier services.

OSK Research also highlighted the potential for DRB to unlock the value of the five land plots owned by Pos Malaysia through redevelopment.

The research firm said it is maintaining the "buy" call on Pos Malaysia with a fair value (FV) of RM4.12. -- Bernama

Pos Malaysia still delivers on time

Stock Name: POS
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.

POS - Co-development of landbank with new owner next step for Pos

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

Pos Malaysia Bhd
(April 25, RM3.23)
Maintain hold at RM3.37 with fair value of RM3.95: We maintain our 'hold' on Pos Malaysia Bhd (Pos) based on a 10% discount to our unchanged discounted cash flow-value of RM4 per share (weighted average cost of capital: 8.2%, terminal growth: 2%) and surplus of 35 sen per share from the implied sale of unregulated land.

As we had anticipated, Khazanah Nasional's sale of a 32.2% stake in Pos was won by DRB-Hicom Bhd, with the winning bid of RM3.60 per share ' a 6.8% premium to last Friday's close.

Key details of the winning bid were: (i) Payment mechanism wasn't included in the announcement; (ii) The deal should be completed by end-June 2011, subject to the amendments to government's Golden Share in Pos; (iii) The amendments include the government's reservation to appoint up to two board members in Pos and the removal of rights to appoint the chairman and managing director and fix their remuneration. The modifications, however, may still include government approval of any future voluntary separation scheme (VSS) for Pos staff; and (iv) The offer price is conditional upon the liberalisation of land usage for Pos' 16 plots of identified land regulated by the Federal Land Commissioner (FLC). In the event the variation does not happen by December 2011, DRB-Hicom will be refunded 10 sen per share or RM17.3 million. The amendments will provide for the inclusion of commercial use (over and above the mandatory postal use), commercial development and outright sale.

While we have included ready-for-sale Pos land which is not regulated by the FLC in our valuation (market value of landbank), the most valuable land which falls under FLC's ambit is Pos' 3.1acres of postmen's quarters behind the Pudu Jail land redevelopment. We are positive about the liberalisation negotiation on the land, with a potential surplus of 19 sen per share just from an outright sale.

We believe that with the impending entry of DRB-Hicom and its property development arm Hicom Properties Sdn Bhd, Pos may co-develop the land with the new owners.

DRB-Hicom also plans to revitalise Pos' logistics division, which has taken a back seat under the current management. DRB-Hicom's ultimate shareholder, Tan Sri Syed Mokhtar Al-Bukhary, is a known logistics magnate, providing Pos a growth platform as a last-mile volume throughput for his extensive retail-based and industrial interests.

While we believe DRB-Hicom's bid replicates our valuation on Pos' current operations, investors looking at participating in Pos' imminent real-estate development should accumulate as our fair value only imputes its ready-for-sale land at market value. However, development of the landbank will be earnings accretive over a longer period, vis-a-vis an outright sale. ' AmResearch, April 25


This article appeared in The Edge Financial Daily, April 26, 2011.

POS - OSK Research maintains BUY on POS Malaysia at RM4.12

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

KUALA LUMPUR: OSK Research said DRB-Hicom announced that it has succeeded in its bid for Khazanah Nasional's 32.21% stake in Pos Malaysia for RM622.8m, or RM3.60 per share.

It said on Monday, April 25 the acquisition price reflects a RM17.3 million that is refundable if POS Malaysia cannot secure Government consent for commercial use of land leased to it by Dec 31, 2011.

OSK Research said DRB-Hicom, which owns a 70% of Bank Muamalat, was a good fit for POS Malaysia as the former could leverage on the latter's postal network to enhance both their operations and growth as a more complete network.

'Although we see the offer price as unattractive and not reflective of the value of POS Malaysia's related land, it still adequately reflects POS Malaysia's postal business at 14.5x FY11 PER.

'Given that we see DRB-Hicom aiming to redevelop POS Malaysia's land, we maintain our SOP derived FV of RM4.12, which includes the value of the 5 land plots directly owned by POS Malaysia.

'While the share price may suffer some selling pressure in the short term, we maintain our BUY call on potential longer term upside arising from DRB-Hicom unlocking the land value,' it said.

POS - OSK Research maintains BUY on POS Malaysia at RM4.12

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

KUALA LUMPUR: OSK Research said DRB-Hicom announced that it has succeeded in its bid for Khazanah Nasional's 32.21% stake in Pos Malaysia for RM622.8m, or RM3.60 per share.

It said on Monday, April 25 the acquisition price reflects a RM17.3 million that is refundable if POS Malaysia cannot secure Government consent for commercial use of land leased to it by Dec 31, 2011.

OSK Research said DRB-Hicom, which owns a 70% of Bank Muamalat, was a good fit for POS Malaysia as the former could leverage on the latter's postal network to enhance both their operations and growth as a more complete network.

'Although we see the offer price as unattractive and not reflective of the value of POS Malaysia's related land, it still adequately reflects POS Malaysia's postal business at 14.5x FY11 PER.

'Given that we see DRB-Hicom aiming to redevelop POS Malaysia's land, we maintain our SOP derived FV of RM4.12, which includes the value of the 5 land plots directly owned by POS Malaysia.

'While the share price may suffer some selling pressure in the short term, we maintain our BUY call on potential longer term upside arising from DRB-Hicom unlocking the land value,' it said.

POS - OSK maintains 'buy' call on Pos Malaysia

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

OSK Research Sdn Bhd has maintained its "buy" call, with a fair value of RM4.12, on Pos Malaysia Bhd based on a sum-of-parts valuation and existing earnings forecast.

In a research note today, it said Pos Malaysia has declared a one-off final and special dividend of 17.5 sen, which provided a dividend yield of 5.7 per cent.

Meanwhile, OSK said the unveiling of Pos Malaysia's strategic partnership remained a key catalyst as it may be timed to coincide with measures to unlock the value of its land bank.

"Although management has met the bidders to acquire its 32.2 per cent stake in the company, they will only present their proposals to Khazanah Nasional Bhd and Pos Malaysia's management would not know what these are at this juncture," it added .

In a recent announcement, Khazanah Nasional Bhd said it had shortlisted DRB-Hicom Bhd, Nationwide Express Courier Services and a Amanah REIT-Malaysia Pacific Corp joint venture, with offers ranging between RM3.38 and RM4.62 per share.

"Pos Malaysia's management expects the strategic partner to be announced by the Prime Minister during Invest Malaysia 2011 on April 12," it added. -- BERNAMA

POS - Transformation on track for Pos Malaysia

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.

POS - OSK maintains 'buy' call on Pos Malaysia

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

OSK Research is maintaining a "buy" call on Pos Malaysia Bhd but has lowered the target price to RM4.12, from RM4.45 previously, following spiraling costs of incorporating higher jet fuel assumption and its overall staff cost.

It toned down earnings expectation for financial year 2011 and 2012 by 17 per cent and 13.3 per cent, respectively.

OSK said the unveiling of Pos Malaysia's strategic partnership, expected to be announced within the next one to two months as the deadline of March 15 for bidding draws near, remained a key catalyst as it may be timed to coincide with measures to unlock the value of its landbank.

It said the potential relaxation of the use of its landbank under the purview of the Postal Bill appeared to be progressing well as the draft Bill would be tabled in Parliament sometime this month.

"We expect the proposed amendments related to relaxation to go through as it would make more economic sense for the government to optimise the potential value of the landbank," it added. -- Bernama

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.