mInvest Research also said in FY18, Pos Malaysia
KUALA LUMPUR: AmInvestment Research has upgraded its recommendation on Pos Malaysia to Underweight from Sell but maintained its forecasts and fair value of RM1.65 a share after attending a meeting with the company.
The research house said on Monday Pos Malaysia’s share price had fallen by 43% since its Sell recommendation in November 2018.
It said the highlights from the meeting were that Pos was exploring the agency model to stem the bleed in postal services.
The recent 3QFY19 results saw the postal segment nearing a three-year streak of losses amid accelerating decline in traditional mail volume and its inability to fully reduce the number of post offices and rationalise its workforce.
“To mitigate losses from the postal services segment, the group is currently in the midst of discussion with a potential partner with 15,000 agents nationwide, planning to shift some services to agents and aiming to gradually rationalize the post office footprint (premises and staff) by 4QFY20 in phases,” the research house said.
Pos Malaysia also shared that it expects to receive an official answer from the MCMC regarding the possibility of a tariff hike by end-CY19.
“However, Pos is aware that the tariff hike will only be a temporary relief. Currently, more than 90% of mail delivered is business mail and the tariff hike might drive more businesses to go digital and will push businesses to opt out of mail services instead due to the higher rates charged,” it said.
AmInvest Research also said in FY18, Pos Malaysia’ insurance business continued to grow, increasing by 6% due to higher premiums per customer.
Currently, the bulk of its insurance business is primarily motor insurance. Moving forward, the group is looking into the digitalisation of its insurance business by moving to an aggregator model – where Pos will have a comparison engine on its site with options to “click-through” to the insurance carriers own sites and will be compensated by participating carriers through commissions.
“Furthermore, the group also shared that it might extend the types of insurance offered to include fire, personal accident, travel and etc.
“We note that this is currently only at the ideation stage with much more to be done in terms of getting more insurers on board and getting approvals from relevant parties,” it said.
AmInvest Research said the group was revamping its existing digital platform, i.e. EziSend and its Pos mobile app, and is targeting to relaunch the platforms by July 2019.
The group shared its plans to rebrand EziSend into a web-based parcel aggregator for Pos Malaysia, allowing users to access to all their services in one platform, i.e. basic, standard and express services.
As for its mobile app which was last updated four years ago, the research house said the group is planning to revamp its mobile app by adding new features such as allowing users to change or reschedule delivery times and ties in with EziSend to allow customers to generate a QR codes to print consignment notes from the convenience of their home or at the nearest post office.
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