Courier segment weighs on Pos Malaysia 9M earnings

In a separate statement, Pos Malaysia said despite challenging operating conditions, it would continue to press ahead with its initiatives to become the premier e-commerce fulfilment and logistics services provider domestically, and in time, regionally.

KUALA LUMPUR: POS Malaysia reported headline net profit of RM64mil (-11% on-year) and core net profit of RM48mil (-24% on-year) in the nine months ended Dec 31, 2017, weighed down by the weaker courier segment.

RHB Research said on Tuesday at 48% of its and consensus’ FY18 estimates, the results were lower than expected. 

It said while revenue grew a strong 26% on-year on consolidation of acquisitions and moderating decline in traditional mail operations, earnings missed. 

“This stemmed from higher opex, finance and depreciation charges, as well as a 5.3ppts decline in courier margins. We believe an aggressive pricing strategy and competition in the courier segment had resulted in weaker-than-expected revenue growth and margins,” it said.

RHB Research said this was despite expectations of a seasonally stronger 3Q on the back of the “Singles’ Day” sale. 

“We are maintaining our earnings forecasts, buy call and discounted cashflow-based target price of  RM6.30 (26% upside) for now, pending the analysts’ briefing this morning. 

“Based on our sensitivity analysis, every one percentage point decline in courier revenue is a 2.8 percentage point  impact to our net profit forecasts.

“Pos Malaysia’s balance sheet remains in a net cash position, although the company’s total debt has increased 82% to RM437mil,” it said.