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Tuesday, 31 December 2013

SingPost acquisition of Axis Plaza heat up competition with Post Malaysia

Axis Reit Managers Bhd (ARMB), the manager of Axis Real Estate Investment Trust (Axis-REIT), has proposed to dispose of Axis Plaza for RM34mil to Collective Developers Sdn Bhd last week.

Located at Glenmarie, Shah Alam, the freehold five-storey office/warehouse with a two-storey basement car park was one of the public initial offering properties purchased eight years ago for a lump sum price of RM22mil.

ARMB chief executive officer Datuk Stewart Labrooy said  the proposed disposal of Axis Plaza was due for completion by April 2014.

Collective Developers Sdn Bhd is an indirect subsidiary of Singapore Post Limited. In an announcement to SGX. Singapore Post Limited stated the Proposed Acquisition is to support the expansion of the Company's regional operations. This seem a wake up call Post Malaysia Berhad.

Singapore Post Limited wholly own subsidiary Quantium Solutions also have an office in Glenmarie, Shah  Alam. It seem business is good after Post Malaysia Bhd increased it International Postal rate since middle of May 2013. Collective Developers Sdn Bhd is a shelf company acquired on 20 Dec 2013 by Singapore Post. It is not sure why Singapore Post Limited to use Quantium Solutions it self to acquired the building. In fact, SingPost have more than 27% stake in another Malaysia base courier company GD Express  Carrier Bhd (GDex), a company listed on main board Bursa Malaysia.

However,Managing director Teong Teck Lean, GDex's largest shareholder with a 41.81% stake, said although its business arrangements with SingPost for the past two years have not been executed “in a very big way”, the company hopes to continue to leverage the partnership.

"We are helping [SingPost] complete the last mile here [and send parcels to their Malaysian clients] .

This mean GD Express helping Singpost complete last mile and send parcels to their Malaysian Clients but not helping route parcel from Malaysia to SingPost to re-route the parcel overseas. This required some technical capability to develop a software to track the parcel and let Singpost know the parcel from Malaysia has been paid as they cannot sell Singapore Stamp here. This job is done by a Malaysian technology startup. However, this can be done in west Malaysia only as the startup do not have network to collect parcel from Ecommerce operator to re-route the parcel. Maybe GD Express can leverage their network in East Malaysia.

Thus,  SingPost have 3 entity operate in Malaysia now, Quantium Solutions, GD Extpress and Collective Developers Sdn Bhd. Malaysia also have Competition Act 2010.

SingPost is Associate company of Singapore Telecommunications.

SingPost quarterly revenue growth approximately 32% and it profit growth between 6% to 14%.

AMMB stated that the courier segment continues to be the key growth area for Pos, recording a 54% growth in operating profit, mainly driven by a boost in online transactions which resulted in a rise in on-demand customer revenue, as well as increased contract customers, parcels and prepaid items.

 AmeSecurities further stated that mail segment recorded an increase of 11% in its operating profit due to higher revenue for prepaid, registered mail, admail, direct mail, international mail and corporate mail, coupled with lower staff costs, support costs and transfer costs. Its traditional franking and ordinary mail continue to contract by 6.4% and 5.4% respectively.

After an price hike of 400% in international postal rate.  Mail segment only growth 11%. This mean either many Ecommerce operator have ceased to operate or have route their parcel via SingPost. Mail segment might encounter same growth rate of 54% or higher than local courier segment if there is no price hike of international postal rate in May 2013. Slower growth in Ecommerce export also cause pressure to Malaysia currency, Ringgit  and cause import leaded inflation.

HLG stated that YoY. Revenue increased by 5.4% to RM316.8m mainly on stronger contribution from Courier segment,  Hong Leong Investment Bank Research further stated QoQ. Core profits declined by 7.5%, despite revenue declined 11.0% on lower volumes,

Kenanga stated:

Key Results Highlights QoQ, 2Q14 revenue fell across the board, led by mail (-14%); retail (-2%) and others (-54%) which more than offset a small improvement from courier (+2%) (refer to summary results table for further details). Overall revenue fell 11% mainly due to lower traditional mail services, lower contribution from LHDN E-filing and lower commissions from agencies in the retail segment. Correspondingly, QoQ, 2Q14 operating profit fell 14% on the back of lower turnover.

YoY, 1H14’s revenues from three segments rose as follows; mail (+5%); courier (+23%) and others (+26%) which more than offset lower contribution from retail (-22%). (refer to summary results table for further details). 1H14 operating profit rose 34% to RM108m due to higher revenue despite increase in expenses. Operating expenses increased by 6.3%

Kenanga further stated that (i) POS requires an estimated capital of RM500m as working capital for its AL-Rahnu Islamic pawn broking business and (ii) its planned estimated capex in FY Mar 14 of RM330m exceeds FY14’s operating cash-flow of RM290m.

This put pressure on Pos Malaysia's  Balance Sheet.

3400万售Axis Plaza Axis 产托拟派1100万收入
Axis产托发文告表示,已跟新加坡邮政(SingPost)的子公司———Collective Developers私人有限公司达成买卖协议,以上述金额脱售位于莎阿南Hicom Glenmarie工业区的Axis Plaza予后者。


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