HLIB Research upgrades Pos Malaysia, raises target price to RM1.55

KUALA LUMPUR (Jan 29): Hong Leong IB Research has upgraded Pos Malaysia Bhd to “Hold” at RM1.44 with a higher target price of RM1.55 (from RM1.25) after Pos Malaysia announced the increase in postage hike to RM1.30 from 60 sen per standard 20g mail effective on Feb 1.

In a note today, the research house said it was positive on the news of the postage hike in the near team, as Pos Malaysia is able to generate additional estimated revenue of circa RM250 million on a full year basis (circa RM230 million for FY20).

“Following the news, we now expect profit of RM77.3 million on FY20 earnings from a loss of RM25.4 million as we take into account higher revenue generated from postal services in tandem with higher cost possibility.

“Upgrade to Hold (from Sell) with a higher target price of RM1.55 (from RM1.25) based on 0.7x FY12/20 BVPS of RM2.22 (at -1.25 S.D. below its 3-year historical P/B of 1.46x),” it said.