KUALA LUMPUR (May 25): Pos Malaysia Bhd fell 4.45% or 22 sen to RM4.72 during this morning’s market trade, following the group’s announcement of lower net profit.

As at 10:35am, Pos Malaysia (fundamental: 2.5; valuation: 1.1) was the third largest decliner, with about 151,300 shares traded.

Pos Malaysia’s share price fell after the group announced last Friday that its net profit plunged 62% to RM19.9 million for its 4Q15, from RM52.2 million a year ago. The group blamed the drop on higher operating expenses.

Revenue for the quarter was also down 6.8% to RM395.54 million from RM424.37 million in 4QFY14.

Multiple analysts have lowered their target price for the stock, following the group’s recent disappointing results. “Pos’ 4QFY15 earnings came in at RM19.9 million, bringing FY15 core net profit to RM127.1 million (-20.1% YoY). This is lower than expected, accounting for only 90% of our estimates and 86% of market estimates.

“We maintain our Hold recommendation for Pos Malaysia (Pos) with a lower fair value of RM4.80 (versus RM4.90 previously), based on our DCF valuation,” said AmResearch.

“We maintained Sell on Pos with lower Target Price of RM4.30 (from RM4.80), after we rolled forward our valuation into FY03/17, with lowered 16x P/E (from 18x), given the disappointing results, initiatives setbacks and lack of corporate disclosure,” said HongLeong Investment Bank.

Going forward, the group said its performance for FY16 is expected to remain favourable.

“The Malaysian economy is expected to continue to register steady growth in 2015 with Bank Negara Malaysia projecting a gross domestic product increase of 5% in the year under review, underpinned by sustained strength in domestic demand.

“(As such,) expectations of sustained domestic demand should continue to augur positively for Pos Malaysia going forward. The steady backdrop is expected to continue enhancing the contribution from core offerings such as parcels including small packets, courier and express services, especially with the rising appetite for e-commerce business,” it added.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)