Journey to Wealth
POS Malaysia - Higher than expected 1Q13 results
Period 1Q13
Actual vs. Expectations
The 1Q13 core net profit of RM36m came in higher than our expectation by 15% but was within the consensus.
The stronger than expected results were mainly due to higher revenue contribution from its other income and courier businesses, which jump by 66% and 34%, respectively.
Dividends No dividend was declared during the quarter as expected.
Key Results Highlights
YoY, the 1Q13 core net profit of RM36m increased by 48% (vs. 2QCY11) on the back of a 9% growth in revenue. This was mainly due to higher than expected contributions from its courier and other income (i.e. digital certificates, printing & insertions). The increase was also due to a higher other operating income by 116%.
QoQ, 1Q13 (vs. 1QCY12/5Q12) revenue increased marginally by 1% while the core net profit increased by 25% due to a higher margin recorded from its courier and logistic business from 6% to 23% (higher demand and a decrease in jet fuel cost by 13%).
Outlook We expect POSM to improve its margin in FY13 arising from its other income and the initiative from its new business plan. We expect a more meaningful impact in FY14, particularly from its shared financing and Islamic Pawn business.
Change to Forecasts
We have revised up our FY12-13 earnings by 14% and 1% respectively due to upward revision in its courier margin and higher contribution from other incomes.
Rating MAINTAIN OUTPERFORM
Maintaining our OUTPERFORM rating due to the attractive upside (+37%) from the current market price coupled with a decent net dividend yield of 4.3%.
Valuation Maintaining our Target Price at RM3.70 based on DCF valuation (FY14).
Risks (1) Delays in the execution of its business transformation plan (2) a sharp increase in jet fuel price.
Source: Kenanga
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