KUCHING: Pos Malaysia Bhd (Pos Malaysia) recently disclosed further details on its new tariff structure and also cautioned that street estimates on revenue had been optimistic, as discounts on bulk mails were not taken into account.According to OSK Research Sdn Bhd (OSK Research), including this into its volume assumptions of the group for this and next year arrived at a lower yield per mail.
Additionally, the revised lower yield per mail estimate by five per cent and 17 per cent effectively reduced its total top-line by between four per cent and 10 per cent.
In the meantime, the research house’s 2012 numbers were cut by six per cent on the back of a slight increment in volume lifted by direct mail and parcels.
On a related note, management also expected an average incremental salary of 16 per cent across the board for its unionised postmen and clerical staff.
As opposed to the research firm’s assumption that the salary hike would be backdated, the 16 per cent average increase for its ununionised staff force would take effect on July 1 instead.
Ultimately, this reduced its operating cost estimates and raised its earnings before interest, tax, depreciation and amortisation (EBITDA) for this by 11 per cent while EBITDA for its 2011 and 2012 was lower by 25 per cent and 13 per cent respectively given the downward revision in revenue.
On the other hand, Pos Malaysia said it was not involved in any discussion with any party currently and also reaffirmed that it was not kept in the loop on the potential review of the Postal Land Act announced by the prime minister.
It added that the review of the Postal Land Act required parliamentary approval which could be tricky.
OSK Research had revised upwards this year’s earnings estimate by 15 per cent as it factored in the lower staff costs. For next year and 2012, due to the lower yield per mail, its bottom-line was trimmed accordingly by 26 per cent and 13 per cent respectively.
The research house now ascribed a sum-of-parts (SOP) valuation on Pos Malaysia considering that a potential sale or development of its owned land bank was not considered by the Federal Land Commissioner.
Government land bank revaluation and speculation on potential partners aside, OSK Research derived a SOP target price of RM3.53 per share.