Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on December 13, 2017

KUALA LUMPUR: Shares in Pos Malaysia Bhd fell as much as 5.6% in early trade yesterday as the market reacted to the resignation of the company’s group chief executive officer (CEO).

Shares in the company dropped to an intraday low of RM5.09 before closing at RM5.10, down 29 sen or 5.38% from its previous close, bringing its market capitalisation to RM3.99 billion. A total of 4.18 million shares were traded.

On Monday, Pos Malaysia announced the resignation of its group CEO Datuk Mohd Shukrie Mohd Salleh effective Dec 31 after five years with the company.

RHB Research Institute analyst Michelle Foong said the announcement came as a surprise and believes that the near-term share price would be impacted on the back of this news.

“During Datuk Mohd Shukrie’s tenure as group CEO at Pos Malaysia since November 2015, the company has provided better clarity of management strategies and has seen the acquisition and consolidation of several logistics assets — which resulted in the gradual improvement in earnings,” she said in a note to clients yesterday.

Nevertheless, the research firm is maintaining a “buy” recommendation on the stock, with a target price of RM6.30, suggesting a 17% upside, on the assumption that the management’s recent initiatives on cost optimisation and new product offerings would remain on track.

“We continue to view Pos Malaysia as fundamentally strong in its position to capture the growth of e-commerce in Malaysia, which should mitigate the decline in its postal operations,” said Foong.

Another analyst with a local research house who declined to be named noted that Pos Malaysia had seen its share price improved from just below RM2 in early 2016 to its current level, along with earnings recovery, since Mohd Shukrie took over the helm.

“Earnings figures paint the same picture as well, with [the group’s] FY17 net profit figures growing back a healthy 33% after plunging 50% a year prior,” the analyst told The Edge Financial Daily via email.

“Outlook-wise, I believe the main growth driver for Pos Malaysia would be its parcel delivery operations, which is expected to grow in tandem with the growing e-commerce, especially since it has a monopolistic footing in the county’s consumer-to-consumer parcel delivery market,” said the analyst.

“[Additionally], Pos Malaysia could potentially be one of the more direct beneficiaries of the Digital Free Trade Zone (DFTZ) as well, seeing that it is the operator of the e-fulfilment hub in Phase 1 of the DFTZ,” he added.

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