RHB sees Pos Malaysia reversing losses in 2HFY20

TheEdge Tue, Jun 16, 2020 12:53pm - 10 months ago

KUALA LUMPUR (June 16): RHB Investment Bank Bhd said today it expects Pos Malaysia Bhd's losses to be reversed in the second half of the financial year ending Dec 31, 2020 (2HFY20) on business activity normalisation and the courier segment’s strong momentum as the nation gradually adapts to the impact of the Covid-19 pandemic-driven movement control order (MCO).

RHB analyst Lester Siew wrote in a note today that, however, the research house believes Pos Malaysia's aviation segment will remain under pressure this year due to reduced air traffic.

"Meanwhile, the group’s tight liquidity position is expected to be alleviated with the disposal of certain non-core assets, including its Islamic pawnbroking business (Pos ArRahnu).

"We believe losses could widen in 2QFY20 (the second quarter) due to further revenue shortfall during the extended MCO period. On the other hand, this is expected to be mitigated by a surge in courier volume, with 590,000 average daily parcels recorded in April (+72% versus 1QFY20’s daily average of 343,000), supported by 60% and 176% increases in users and shipments respectively through its SendParcel online platform.

"The group also saw a strong recovery in transhipment volume following the resumption of business in China," he said.

RHB's note today followed Pos Malaysia's anouncement yesterday of its 1QFY20 financial results. Pos Malaysia said its revenue and net loss stood at RM558.53 million and RM49.22 mllion respectively.

Pos Malaysia said there were no comparative figures for 1QFY20 due to a change in the company's financial year end from March 31 to Dec 31.

Siew said today Pos Malaysia's 1QFY20 core net loss of RM27 million met RHB's full-year estimate of a RM63 million loss but missed the consensus forecast of a RM13 million profit.

"We attribute the improved results to management’s better cost controls alongside the postal tariff hike in February, albeit dampened by the MCO which affected its postal, aviation and logistics businesses as reflected in its lower top line.

"We continue to favour Pos Malaysia for its turnaround prospects, supported by the lifting of the postal tariff overhang and its Pos Laju courier business’ positive traction," he said.

RHB maintained its "buy" call for Pos Malaysia shares with an unchanged target price of RM1.10.

On Bursa Malaysia today, Pos Malaysia's share price had risen five sen or 5.26% to RM1 as at the time of writing, giving it a market value of RM782.78 million. The stock saw 6.34 million shares transacted.

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