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



OSK Research has revised upwards Pos Malaysia Bhd's earnings forecast by eight per cent for financial year 2010 (FY10) and two per cent for FY12 while keeping FY11's intact.

In a research note today, OSK said the revision was prompted by Pos Malaysia's better-than-expected volume for the first nine months of this financial year following postal rate increase.

"It recorded a decline of only 5.4 per cent as opposed to our full-year expectations of a fall of 10.7 per cent," it said.

OSK said Pos Malaysia Bhd's transformation plan remained intact though impact to earnings would be marginal for next year.

It said the excitement over the unlocking of Pos Malaysia's land bank value remained in place as the Postal Land Act was scheduled to be tabled in Parliament this month.

"We foresee the relaxation on land bank usage will go through as it would make economic sense for the government to maximise the potential value of these land bank scattered nationwide.

"Currently, the land bank (of over 600 outlets) is restricted to offering postal-related services," it said.

The research firm said the relaxation on the usage would act as a key catalyst for Pos Malaysia.

"This will unlock the value potential of its land bank noting that other national postal service providers overseas have already leveraged on their postal branches by combining other forms of commercial activities such as supermarkets, banks and restaurants," it said.

It said other possible amendment of the Postal Land Act could also see Pos Malaysia expanding its foray into franchising its post offices to boost entrepreneurial activities among its employees and the unemployed.

OSK said it would maintain its ''buy'' call on Pos Malaysia with unchanged target price of RM4.33. -- Bernama