This article first appeared in The Edge Malaysia Weekly on March 31, 2025 - April 6, 2025

DRB Hicom Bhd (KL:DRBHCOM) is said to be exploring options to restructure its 53.49%-owned unit Pos Malaysia Bhd (KL:POS), which has been bleeding red ink for nearly six years.

The diversified conglomerate may form a partnership with a European party to revive the postal group’s courier service division, sources familiar with the matter tell The Edge.

Details are scarce. It is not known whether the public-listed postal group, which is currently valued at RM199.6 million, will be taken private or if the plan entails the divestment of any business division, in particular the courier service division.

Pos Malaysia’s share price, which hit an all-time low of 16.5 sen on March 11, has staged a rebound. The stock climbed 46% over three days to close at 25.5 sen last Friday.

Its share price has shed more than 45% over the past year.

A source who knows of the plans at Pos Malaysia cautions that the share price climb may result in a change of heart and even scupper the restructuring plan. “I heard they (the top brass of DRB Hicom, and its controlling shareholder Tan Sri Syed Mokhtar Albukhary) are pretty upset that the plan for Pos Malaysia has leaked out, so it may be put on hold [for a while].”

Syed Mokhtar holds a 55.92% stake in DRB Hicom. Another source says that either RHB Investment Bank Bhd or Maybank Investment Bank Bhd may assist in the restructuring.

It is noteworthy that Charles Robertson Brewer, CEO of Pos Malaysia since August 2021, was previously the chief operating officer of Canada Post Corp and CEO of DHL eCommerce at Deutsche Post AG.

Pos Malaysia’s extensive nationwide branch network, which covers locations ranging from the cities to rural villages, has always been seen as the jewel in its crown. Besides that, it also owns several parcels of land in Selangor.

Talk of the company undergoing a large-scale corporate exercise and restructuring has been making the rounds and goes as far back as a decade ago, resurfacing periodically.

Pos Malaysia is one of 32 companies in which the government has a golden share through the Minister of Finance Inc.

The golden share gives the government the right to overrule any board decisions. One of its prerogatives is that it can appoint up to two board members in Pos Malaysia.

DRB Hicom is understood to be concerned over its controlling stake in Pos Malaysia as its value has depreciated.

In June 2011, DRB Hicom paid RM622.79 million, or RM3.60 per share, to acquire a 32.21% equity stake in Pos Malaysia from Khazanah Nasional Bhd. About a year later, it also bought Proton Holdings Bhd from Khazanah.

In 2016, five years after the acquisition of the Pos Malaysia stake, DRB Hicom sold KL Airport Services Sdn Bhd (KLAS), Hicom Indungan Sdn Bhd and Hicom Engineering Sdn Bhd to Pos Malaysia for RM818.35 million. The asset injections via the issue of new shares bumped up DRB-Hicom’s shareholding in Pos Malaysia to the current level.

Based on last Friday’s closing of 25.5 sen, that stake in Pos Malaysia is valued at RM106.7 million.

While its fortunes may have dwindled, Pos Malaysia had total assets in excess of RM2 billion, or a net asset per share of 37 sen, as at end-December 2024.

To put things in perspective, Pos Malaysia’s four largest pieces of land — 46.84 acres at KL International Airport, Sepang; 9.91 acres in Pekan Hicom, Selangor; 22.26 acres in Section 21 Shah Alam and 33.42 acres in Bandar Sultan Sulaiman, Klang — have a collective net book value of RM231.63 million, which is more than its market capitalisation.

Pos Malaysia’s core postal business has been languishing since the advent of the internet.

In addition, its courier service, Pos Laju, failed to ride the exponential growth in e-commerce activities. Despite its extensive branch network, the postal group could not fend off cut-throat competition in the courier service industry.

Pos Malaysia, which was listed via a reverse takeover of Phileo Allied Bhd in 2001, has also been plagued by challenges, such as staff unions, that have made restructuring difficult.

For its financial year ended December 2024, the company suffered a net loss of RM202.66 million on revenue of RM1.85 billion. In FY2023, it incurred a net loss of RM157.85 million on revenue of RM1.87 billion. Pos Malaysia’s last profitable financial year was the financial year ended March 31, 2018. (It changed its financial year end to Dec 31 in 2019).

Pos Malaysia’s postal business, its largest revenue earner, has been weighing it down. For FY2024, this segment generated RM1.03 billion in turnover but suffered a pre-tax loss of RM196.26 million.

As at end-2024, Pos Malaysia had cash and bank balances amounting to RM121.39 million and deposits with licensed banks of RM11.09 million. It had short-term borrowings of RM320.89 million and long-term debt commitments of RM151 million. Over the years, the group has racked up accumulated losses of RM779.15 million.

On its prospects, Pos Malaysia says it continues to focus on the transformation of its core business and new margin-led business initiatives were introduced during the year.

“In view of shifting market dynamics and our financial performance, Pos Malaysia continues to refine key strategy elements to deliver a competitive edge,” the company says.

DRB Hicom’s financials have not been stellar either. For FY2024, the group posted a net profit of RM22.55 million on RM16.19 billion in revenue.

As at end-2024, its bank balances and cash deposits were at RM2.13 billion, while its long-term borrowings amounted to RM6.21 billion and its short-term debt commitments were at RM1.07 billion.

DRB Hicom’s stock hit a multiyear low of 62 sen in intraday trading on March 11. The stock has not recovered, closing at 67 sen last Friday for a market capitalisation of RM1.29 billion.

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