Kenanga Research said it remains cautious on Pos Malaysia due to its declining courier volume.
PETALING JAYA: Pos Malaysia Bhd
’s prospects continue to be challenging, as the conventional mail business struggles to turn around in the digital age.
Kenanga Research said the group’s core net loss of RM124.1mil in the nine-month period of the financial year 2024 (9M24) came in wider than its expectations at 87% of the research house’s full-year forecast.
“The key variance against our forecast came from its inability to contain operating expenses,” the research house said in a report yesterday.
Kenanga Research has sole coverage on the stock.
On a year-on-year (y-o-y) basis, Pos Malaysia’s 9M24 core net loss expanded by 62%. The group’s 9M24 revenue fell marginally by 1% y-o-y with a decrease in demand for its postal and logistics services, which were offset by a stronger showing from its aviation segment.
Moreover, the group’s logistics sales were weighed down by an unfavourable business environment. Aviation sales, on the other hand, continued to recover on the back of the booming air freight sector coupled with the resumption of umrah charter flights, which also boosted in-flight catering services.
On a quarterly basis however, Pos Malaysia’s core net loss for the third quarter of financial year 2024 (3Q24) was reduced by 12%.
The group’s revenue for 3Q24 rose by 4% quarter-on-quarter driven by postal business on improved parcel volumes, logistics services as the company is pursuing new business opportunities and expanding its market share in the automotive and aviation sectors.
Kenanga Research said it remains cautious on Pos Malaysia due to its declining courier volume, as the group has to face tremendous competition from new players such as J&T Express and Ninja Van that undercut aggressively on rates to grow their market share.
Kenanga Research maintained an “underperform” call on Pos Malaysia with a target price of 25 sen.
“Risks to our call include the privatisation of Pos Malaysia at a premium over the market price, the return of profitability as cost rationalisation efforts pay off, and the group emerging stronger post-consolidation of the courier service segment,” it said.
