Period     4QFY13/12MFY13

Actual vs. Expectations  The FY13 net profit of RM152m came in slightly above our estimate of RM142m due to the better-than-expected performance from the mail and retail segments. However, the results were in line with the market’s expectation.  

Dividends    No dividends were proposed for 4QFY13. The total dividend declared for FY13 was 6 sen. 

Key Results Highlights    The FY13 net profit rose 46% to RM152m compared to the same period last year, backed by a higher EBIT and other incomes despite the company incurring higher operating costs. Operating costs grew 6% due to the increase in staff costs by 9% following the salary adjustment and annual increment, and also higher depreciation and amortisation charges on the refurbishment of Pos Malaysia Headquarters.

YoY,  4Q13 net profit of RM345m grew by 10% underpinned by a higher contribution from the mail segment, which increased by 64% mainly from new products and growth in direct mail. However, the courier segment suffered a loss of RM200k from higher transportation costs and transfer costs as well as lower revenue generated from parcels and express mail by 23.9% and 6.6% respectively. 

QoQ,  4Q13 net profit was up by 10% due to higher other incomes and the EBIT. 

Outlook    Management is banking on higher profits from its profitable courier and logistics segment through leveraging on its numerous Pos Laju centres in Malaysia.

The group is also strengthening its retail segment, making it a one-stop solution centre, especially with the growth of its Islamic pawnbroking (Ar-Rahnu) business.   

Change to Forecasts   We have increased our FY14F earnings estimates by 8% by factoring in a higher growth for the mail, courier and retail segment. 

Rating    Maintain OUTPERFORM

Valuation     Our DCF-based target price has been increased to RM4.90 from RM4.20 previously.

Risks    Delays in execution of its business transformation plan.

A sharp increase in jet fuel price.

Source: Kenanga