Period 3Q15/9M15
Actual vs. Expectations 9M15 net profit of RM107m (+0.3% YoY) came in within expectations, at 71% and 77% of our, and consensus, full-year forecasts, respectively.
Dividends No dividend was declared during the quarter.
Key Result Highlights QoQ, 3Q15 revenue fell 3.7% as 2Q15 was boosted by the recognition of expired postal order amounting to RM26.5m. However the fall was offset by higher contribution from courier (+5.6%) and mail (+3.5%). Specifically, mail volume rose due to higher contribution from both international business and registered mail. Courier was higher underpinned by higher revenue generated from walk-in customers and innovative prepaid products, consistent with the growth in e-commerce transactions. This brings 3Q15 net profit to RM46m (+32% QoQ).
YoY, 9M15 operating expenses rose by 10% YoY primarily due to staff and transportation costs. The higher staff cost was due to strengthening of growth segments such as PosLaju and over-the-counter Financial Services at post offices. The higher transportation cost was due to higher expenses relating to cross border postal charges arising from the growth in trans-shipment business which Pos Malaysia only embarked upon during the latter half of FY14 and increase in air freight charges relating to Universal Service Obligation under the Postal Services Act 2012. This brings 9M15 net profit to RM107m.
Outlook Pos Malaysia is looking to grow its profitable courier and logistics segment by leveraging on its wide Pos Laju network as well as extracting further synergies from Kuala Lumpur Airport Services (KLAS), a wholly-owned subsidiary of DRB-Hicom and Pos Malaysia, to provide an efficient logistic management service.
The group is also strengthening its retail segment, making it a one-stop solution centre, especially with the growth of its Islamic pawn-broking (Ar-Rahnu) business.
Looking ahead, Pos Malaysia is staying on course to implementing and delivering its five-year Strategic Plan initiated in 2012. Currently into its second phase, the plan is to create an efficient and effective foundation that will provide the strength and stability to support revenue diversification, in line with best practices of other successful postal organisations.
Change to Forecasts No changes to our earnings forecasts.
Rating & Valuation Maintain Underperform and TP of RM4.44 based on unchanged 15x CY15 EPS of 29.6 sen.
Risks Delays in execution of its business transformation plan.
Source: Kenanga
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