Quick take: Pos Malaysia shares up 6% on postage rates revision

KUALA LUMPUR: Shares of Pos Malaysia Bhd surged over 6% in early trade Wednesday after it revised prices of postage rates for commercial mail.

The postal group advanced 6.25%, or nine sen to RM1.53 with 7.53 million shares traded.

Pos Malaysia will raise postage rates for registered mail, commercial mail and small parcels below 2kg, effective Feb 1, 2020.

Pos Malaysia said the new rates were the result of rising operational costs and the increase in the international rate structure by the Universal Postal Union (UPU).

Stamp rates for commercial mail will increase by 70 sen, which is more than double, to RM1.30.

The price of commercial private letterboxes will increase by RM150 to RM200 a year.

The postage of commercial registered mail will increase by 90 sen to RM3.10, while non-commercial registered mail will leap 20 sen to RM2.40.

Kenanga Research said the upward revision in postal rates was a positive to Pos Malaysia.

However, the research house said it preferred for the tariff to be increased based on a schedule or formula possibly indexed to inflation or based on certain quantitative or even qualitative KPIs, as compared to a one-time adjustment.

“The key risk of this one-time adjustment includes the inability of Pos Malaysia to fully accommodate its social and commercial responsibilities, especially if the hike in commercial postal rates potentially causes mail volumes to deteriorate even further from current levels,” it said.

“We now forecast a FY20 net profit of RM84mil instead of loss of RM54mil. Target price is raised from RM1.25 to RM1.95 based on 18x FY20 EPS. Upgrade from underperform to outperform,” Kenanga said.

Source: TheStar