Well within expectations. As mentioned in our earlier report 'Eyeing Middle East Courier' on 10 Aug 2012,POSM's 1QFY13 revenue and core earnings were within expectations. Y-o-y, revenue, PBT and core earnings rose 9%, 42% and 51% respectively to RM311m, RM52m and RM37m. While the postal group's core mail division saw marginal 3% y-o-y dip in revenue amid the organic decline in mail volume, this was compensated by the 35% and 43% surge in revenue and profit at its courier business, namely PosLaju, bolstered by resilient consumer spending and hence demand for parcels and documents delivery. In the segment under 'Others', sales of digital certificates, the printing and insertion business, logistics revenue and rental income saw a whopping 333% increase in revenue to RM5m. Of this, sales of digital certificates soared by 150% y-o-y while the revenue from printing and insertion services went up by 10.1%. However, the losses at group's retail segment, PosNiaga, widened by 40% y-o-y due to higher operating expenses arising from an earlier salary increment as well as higher depreciation charges despite seeing a 7.5% increase in commissions received from Over-the-Counter (OTC) transactions.

Outlook still promising. POSM's PBT and core income margins were commendable, with PBT margin expanding by 391bps y-o-y and 149bps q-o-q while core earnings margins widened by 332bps y-o-y and 324bps q-o-q. We attribute the strong margins to the impact from the tariff hike, PosLaju's improved route optimization, and the higher commissions earned by PosNiaga. We are positive on the group's prospects going forward as we see more synergies between DRB-HICOM and POSM emerging, which may be in the form of: