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Friday, May 23, 2014

POS: FY14 Bottom-line improved due to courier business

Results Update

For QE31/3/2014, POS's net profit increased by 129% q-o-q or 61% y-o-y to RM52 million while revenue increased by 29% q-o-q or 23% y-o-y to RM424 million. This being the results for 4QFY14, we can get a glimpse of the full-year performance. Immediately, we can see that POS's bottom-line has benefited from strong growth in its courier division while maintaining its performance for the mailing division. For FY2014, the pre-tax profit from courier division rose from RM55.2 million to RM82.7 million while the mail division's PBT inched up from RM137.9 million to RM144.3 million. In addition, the others division also showed improvement - from RM10.1 million to RM17.1 million, due to higher contributions from printing and insertion services and new logistics business. The improvement in the courier division reflects the increased business from e-commerce. The same thing that drove the business of GDEX.


Table: POS's last 8 quarterly results


Chart 1: POS's last 34 quarterly results

Valuation

POS (closed at RM4.45 yesterday) is now trading at RM4.68 (as at 10.20am). At the current price, POS has a PE of 15.8 times (based on last 4 quarters' EPS of 29.6 sen). At this PE, POS is deemed fairly priced. When compared to GDEX (closed at RM1.71 yesterday) which is trading at a PE of 66 times, POS might even look attractively.


Technical Outlook

POS broke its accelerated uptrend line, S2-S2 at RM5.50 in late 2013. It even broke its next uptrend line, S1-S1 at RM4.70 in April. It then tested its horizontal support at RM4.32 & rebounded. If it can climb back above the S1-S1 uptrend line, it can reclaim that uptrend line and rise again in its path. If it fails to do so, it may slide again to retest the horizontal line at RM4.32 or even the next horizontal line at RM3.70.


Chart 3: POS's weekly chart as at May 22, 2014 (Source: Tradesignum)

Conclusion

Based on improved financial performance (driven by steady growth in the courier busisness) and decent valuation, POS could be a good stock for long-term investment. Its negative point would be the bearish technical outlook which might change after the latest result. Let's wait & see.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, POS.

10 comments:

lai said...

Hi Alex,

What is your view of Encorp after being taking over by felda?

Thank you.

cheer said...

Hi alex, how do u see cpo in the coming months ?

ryan said...

Hi alex,

Based on latest financial result, wats ur view on mnrb mh370 claim and takaful ikhlas tax assessment and penalty

boon said...

POS improved its 'courier business' by more than doubling what it charges for domestic & international packages. The cost effectiveness to a consumer is no longer there.

OS said...

Alex what do u think of SEAL berhad .. The recent EPS seems great..
Any comments on the technicals ?

Alex Lu said...

Hi OS

SEAL has surpassed its 2011 high of RM0.65. It may go to RM0.90-1.00.

Alex Lu said...

Hi boon

POS raising its courier charges may in the short term caused a drop in its volume but I am sure it has done the necessary study to justify the move.

Alex Lu said...

Hi Ryan,

MNRB's net profit increased by 427% q-o-q or 63% y-o-y to RM73.7m while revenue was relatively unchanged. The improvement was due to better results from the reinsurance & retakaful businesses.

Takaful's NP dropped q-o-q but the reason given was lower net investment income.

So for both companies, MH370 disaster did not explain the change in the bottom-line.

I did not see any mention of MH370

Alex Lu said...

Hi cheer

CPO is expected to remain weak after its broke below the horizontal support of RM2500.

Alex Lu said...

Hi lai

Encorp went up right after Effendi left. Poor timing? Then you have this privatization by Felda which would have been inconvenient if Effendi was still around.

However, it is hard to say that Felda's acquisition of Encorp was poorly conceived. After all, Encorp was a profitable property developer & investment company.

Chartwise, it looks like the smart moneys are slowly exiting. I feel it is a take-profit at RM1.60-1.70.