KUALA LUMPUR (March 24): Despite the impact of the Covid-19 outbreak, RHB Research still expects Pos Malaysia Bhd to register a turnaround in its financial year ending Dec 31, 2020, supported by the recent plunge in fuel prices.
RHB Research analyst Lester Siew said the decline in oil prices could mitigate the decline in non-postal revenue over the near term.
“We expect Pos Malaysia to register a sluggish 1HFY20 on the protracted Covid-19 pandemic, which has disrupted e-commerce cross-border shipments and regional air travel.
“That, coupled with the government’s Movement Control Order (MCO), is seen as directly impacting its postal services, courier, and aviation operations. Conversely, the impact should be softened by the near-term plunge in fuel costs,” he said.
However, the research house had cut its earnings forecast by between 31% and 65% on account of lower revenue uplift from the postal rate hike, Covid-19, and the MCO disruptions across the group’s operating segments.
Siew maintained a “buy” call on the counter, with a lower target price of 75 sen, in line with the cut in earnings forecast.
He added that the stock is trading at a steeply discounted level, which is not reflective of Pos Malaysia’s turnaround prospects.
At 11.59am, Pos Malaysia was trading at 60 sen, up 3.5 sen or 6.2%, giving a market capitalisation of RM469.67 million.