KUALA LUMPUR (Sept 22): CIMB Investment Bank Bhd raised its target price for diversified entity DRB-Hicom Bhd's shares to RM1.69, from RM1.50, in anticipation the group would gain from a planned postal rate hike.

DRB-Hicom owns 53.5% of Pos Malaysia Bhd. In a note today, CIMB analyst Mohd Shanaz Noor Azam said the proposed postal rate hike needs the Government's approval.

"There is potential upside to our earnings forecasts, if the proposed postal tariff hikes get the green light. We maintain Add with a higher SOP-based target price of RM1.69 (10% discount to RNAV) as we raise our valuation for POS to reflect its latest share price.

The plans to raise the rates of its services, if approved and implemented, will be positive for POS and DRB, via its stake in POS. Our rough calculation indicates that for every 1% increase in tariffs for the mail segment, POS’s PBT will increase by 9%, and for every 1% increase in charges in its courier segment, POS’s PBT will increase by 6%, Mohd Shanaz said.

At 11:28 a.m., DRB-Hicom shares rose four sen or 3% to RM1.50, for a market value of RM2.82 billion. The stock saw some five million shares traded.