Tags: AmResearch Sdn Bhd | Brokers Call | Pos Malaysia Bhd
Written by Financial Daily
Wednesday, 23 June 2010 10:20
Pos Malaysia Bhd
(June 22, RM3.02)
Maintain buy at RM3.08 with a fair value of RM3.80: The Edge weekly in its report said that a total of 11 parties have expressed interest in picking up Khazanah Nasional Bhd’s RM563 million (at current prices) stake in Pos Malaysia, including two global express and courier players — DHL Express and TNT NV. Local players said to be eyeing the 32% equity interest include Nationwide Express Courier Services, Konsortium Logistik, the Employees Provident Fund (EPF), DRB-Hicom and Tune Group.
Our channel checks reveal that Khazanah had opened the initial stages of the bidding in May, with bidding parties teaming up — led by government-linked entities (GLEs). We believe Pos Malaysia’s existing GLE shareholders — Permodalan Nasional (8.5%), Skim Amanah Saham Bumiputera (8.2%), Valuecap (1.9%) and EPF (5.8%) — will lead a consortium, with select industry players, for Khazanah’s stake — much in line with its efforts to find “a fit and proper” Pos Malaysia.
Asia remains the growth driver even in times of crisis for international express providers. DHL’s Asia-Pacific operations saw a three-year CAGR of 8% (2005-2008), which contributed 25% (15% in FY05) of total FY09 revenue. TNT Asia-Pacific contributes 8% of total group revenue and has a 7% share of the Asia-Pacific express market.
Both companies are not fresh in expanding in Malaysia, however DHL’s 38% dominance in the Asia Pacific express market together with a leaner balance sheet will help Pos Malaysia better expand its courier and logistic segment. Last year, DHL Malaysia handled over 4.8 million global shipments while Pos Malaysia had only a meagre 1% share of overseas courier and logistic volume. Our view is that a strategic tie-up with DHL would give Pos Malaysia a boost internationally.
Furthermore, Malaysia’s inexpensive aircraft landing rights make it a potential regional hub for DHL’s Southeast Asian inbound cargo. For DHL, having a partner with enough bureaucratic leverage would be a priority, and a collaboration with Pos Malaysia would create land redistribution synergies. DHL would be able to pass its volume throughput to Pos Malaysia’s wide infrastructure network.
With current trade at six times FY11F PER and a conservative assumption of 40% payout (three-year average of 60%), Pos Malaysia represents an excellent opportunity to own a 6.3% yielding stock, backed by revenue growth potential from synergies with Khazanah’s preferred partner. This will be sweetened by the regazetting of usage on its RM200 million KL Sentral land. We maintain our buy rating with a fair value of RM3.80 per share. — AmResearch Sdn Bhd, June 22
This article appeared in The Edge Financial Daily, June 23, 2010.
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