Malaysiakini NEWS

HLIB: Many challenges ahead for Pos Malaysia

Stephanie Jacob, KiniBiz  |  Published:  |  Modified:

Pos Malaysia Bhd has been downgraded to ‘hold’ at a higher target price of RM4.65 despite the fact that its 4Q13 core net profits came within expectations, said a report by Hong Leong Investment Bank (HLIB).

HLIB said that while the postal company surpassed the research outfit’s profits forecast for 2013 and met 95.5 percent of consensus estimates, the company was still facing many risks going forward.

pos malaysia 170305 pos malaysia counters A key factor affecting the company’s prospects is the fact that there has been a bigger than anticipated fall in mail volume and new products, and that services which have been introduced to stem the decline have failed to produce results.

The matter is compounded by Pos Malaysia’s struggle to raise postal tariffs in the face of criticism from customers.

Furthermore, the report highlighted that Pos Malaysia’s earnings are closely tied to the price of crude oil, meaning that the current high prices being seen are likely to have a negative impact on the company’s future earnings.

The national postal service also has to contend with the challenges that come with being in a highly regulated industry.

In-house too, the company is faced with the challenge of a tightening ship, especially with regards to its huge number of staff, said HLIB.

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