Friday, October 11, 2013

POS Malaysia

Its catalysts include its future growth and possible special dividend.

The company’s five-year strategic plan remained on track and that the special dividend due to the tax credit expiring at the end of 2013 made investing in the company all the more sweeter.

The special dividend speculated by many could be lower, as management has indicated that it would allocate some money for capital expenditure. Nevertheless, it is still a bonus.

It is relatively cheap (10 Oct 2013), trading at 18 times earnings compared to international peers trading at the range of 25 to 30 times earnings.

The group’s Section 108 tax credits amounted to RM215mil or 40 sen per share as at March 2013, and would expire by end-2013. A special payout is possible, given its net cash of RM1.23 per share as at end-June 2013, and strong recurring cashflow from its core businesses.

The company is primed for future merger and acquisition activities as it looks for opportunities to expand its operations.

Discussions with the Middle Eastern potential target could bear fruit soon while closer to home, it might also be looking at regional expansion with opportunities arising from the intra-regional courier business.

The company had taken steps to further improve its earnings power by offering new initiatives. Besides the expansion of its Islamic pawn-broking business, Pos Malaysia was venturing into the logistics business very cautiously due to the competitive nature of the industry.

It has been leveraging on sister company Proton Holdings Bhd to kick-start its logistics business. Since January 2013, Pos Malaysia has been transporting auto parts between Proton’s vendors and its manufacturing plants. Proton is currently its sole client in the business.

Pos Malaysia’s prized asset was its landbank, notably, the plot of land located in KL Sentral measuring 117,563 sq ft worth an estimated RM176mil. However, while management intended to develop the company’s landbank, it was in no hurry to do so.

Pos Malaysia has larger growth potential compared to SingPost, whose current business model is approaching maturity stage (10 Oct 2013).

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.