PETALING JAYA: Pos Malaysia Bhd
, which has been in the red since the financial year ended Dec 31, 2019 (FY19), is expected to keep its losses below RM200mil over the next two to three years as it continues to engage with the government on universal service obligation (USO) compensation, according to Kenanga Research.
USO refers to the government-mandated requirement for Pos Malaysia to provide nationwide postal services, including in unprofitable rural areas, with compensation paid to offset the cost.
The research house noted that Pos Malaysia has received a one-off RM50mil USO compensation from the Malaysian Communications and Multimedia Commission, which will be reflected in its first quarter ended March 31, 2026 (1Q26) results.
Despite this support, Kenanga Research remains cautious after Pos Malaysia delivered a disappointing FY25 performance, weighed down by higher-than-expected losses in the fourth quarter.
In a report, Kenanga Research said the higher-than-expected losses in 4Q25 were arising from substantial repair works on its logistics services marine vessels.
This overshadowed improvements in the postal segment, which saw stronger parcel volumes.
“Pos Malaysia intends to focus on growing profitable market share and network optimisation for its parcel segment,” Kenanga Research said, noting that it has sole coverage on the stock.
Kenanga Research noted that pricing competition remains intense despite sustained demand from online shopping, made worse by major eCommerce players investing in their own delivery capabilities, such as Shopee Express.
Operationally, Pos Malaysia’s traditional domestic mail volume fell 2%, while international mail volume declined 3%.
However, parcel volume grew 9%, driven by service-led market share gains in both the business-to-business and business-to-consumer segments, Kenanga Research said.
“Its logistics segment growth remained eclipsed by cost overruns and marine asset maintenance, while its aviation segment is flying high on the booming air freight sector which remains its bright spot,” it added.
For FY25, Pos Malaysia posted a core net loss of RM207.9mil, which was 27% worse than Kenanga Research’s forecast, mainly due to elevated operating expenses related to marine vessel repairs.
Following this, Kenanga Research widened its FY26 forecast core net loss by 7%.
Consequently, the research house has cut its target price on Pos Malaysia by one sen or 7% to 14 sen a share, and maintained its “underperform” call on the stock.
The research house said it remains cautious on Pos Malaysia due to structural challenges in its conventional mail business, fierce competition in the courier segment from players such as J&T Express and Ninja Van, and cost-cutting measures that have yet to fully offset revenue pressure.
“While we applaud its venture into ‘POS Shop’ convenience stores through transforming its existing Pos Malaysia stores (it successfully launched 50 stores in FY24), we are concerned about the gestation period of the stores to achieve operational efficiency,” it said.
“Furthermore, Pos Malaysia intends to focus on network optimisation to reduce the cost of end-to-end delivery and service differentiation to accelerate market share growth for its parcel segment (offers better rates than traditional mail, which is slowly decaying on the digitalisation trend).”
