Analysts remain wary over Pos Malaysia's recovery prospects

22/11/2022 01:35 PM

KUALA LUMPUR, Nov 22 (Bernama) -- Analysts remain wary over Pos Malaysia Bhd's recovery prospects although it has managed to reduce its losses year-on-year in the third quarter ended Sept 30, 2022, (Q3 2022).

In a filing with Bursa Malaysia, Pos Malaysia reported that its losses narrowed to -RM33.63 million from -RM43.90 million in Q3 2021, since competition in the last-mile delivery space continues to remain intense as evidenced by Nationwide Express’ announcement that it would gradually cease operations after 37 years.

Hong Leong Investment Bank (HLIB) Research said although Pos Malaysia has plans to mitigate the impact of falling parcel volumes by improving overall parcel yield and reducing transportation costs via productivity improvements, the research outfit remains wary over its recovery prospects.

“Pos Malaysia and other industry players are also engaging with the regulators, hoping to impose a floor-pricing for the price per parcel to create a more level playing field for all courier services providers,” it said in a note today.

Despite Pos Malaysia’s logistics and aviation segments both charting strong growth year-on-year at +25.3 per cent and +34.4 per cent, respectively, overall revenue was down by 8.3 per cent as its postal segment reported a decline of 20.7 per cent.

HLIB Research opined that the decline in the postal segment’s revenue was due to a drop in parcel volumes by its contract customers, as well as the consumer purchasing trend shifting from online to physical stores.

In a separate note, Kenanga Investment Bank Bhd (Kenanga) said the national post and parcel service provider’s conventional mail business struggled to stay relevant, while declining courier volume also weighed on its performance due to aggressive pricing practices and accelerated in-sourcing by e-commerce players.

The research house was also cautious about Pos Malaysia’s prospects as its conventional mail business continued to struggle to stay relevant in the digital age.

“Pos Malaysia has to face tremendous competition from new players that undercut aggressively on rates to grow their market shares, and its cost-cutting measures are insufficient to counter its weakening core business revenue,” it said.

As such, Kenanga increased its forecast for the company’s net loss for financial years 2022-2023 by 19 per cent to 59 per cent. 


It retained its 'underperform' call on Pos Malaysia with a target price (TP) of 49 sen, while HLIB Research also maintained ‘hold’ call with a TP of 60 sen.




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