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Sunday, 7 September 2014

One year after Pos Malaysia international postage rate price hike

Pos Malaysia Bhd increase their international postage rate by nearly 400% on 15 May 2013. 15 Jun 2014 become first anniversary of international postage rate hike.

Pos Malaysia Bhd announced it first quarter 2015 result ended Jun 2014. Net profit drop 44% quarter on Quarter and 35% year on year to RM29million.

The weak result came on the back of weaker revenue from the group’s mail segment, which declined by 4% YoY. This quarter result comprise full quarter of 400% international postage rate price hike whereas last year comprises only half period (15 days) at new price rate, yet the company claim this was due to a higher base in the previous year that was due to volume contributions from the General Election 2013, which on 5 May 2013. It is not sure how general election contribute to higher volume, whereas the company never explain the effect of price hike. Is it contribute to lower volume by 400% price hike? Why revenue decline by 4% when price hike of 400%.

Mail segment’s operating profit fell by 59% YoY when price increase 400% YoY?

In fact, share price of Pos Malaysia Bhd drop substantially in first quarter of 2014. It is Employee Provident Fund (EPF) of Malaysia become net buyer of the counter that provide support of it share price. If not because of EPF. and rebound in second quarter, share price of Pos Malaysia Bhd should be lower than it current price.

In May 2014, Chinese e-commerce giant Alibaba buys a 10.35% stake in rival Singapore's national postal service provider SingPost for S$312.5m ($249m; £148m) to develop its logistics base in South-East Asia.. This cause surge in share prices of two of SingPost associates in Malaysia, Efficient  E Solutions and GD Express.

GD Express has not benefited from being associated with SingPost. Obviously, It seem it never benefited from Pos Malaysia Bhd price hike too. One of beneficiary of Pos Malaysia Bhd price hike, a 7 persons team startup, when interview by Nanyang, MD alex Chong said customer base has growth 10% to 20% to 1,200 customer but revenue has growth 180% from previous year. This mean Pos Malaysia Bhd have lost at least 90 long term customer due to price hike.These are all high volume customer with mail out high volume one a daily basis. As the base is different, it is difficult to estimate how much revenue loss in term of monetary value when a startup growth 180%.

Earlier in March 2014, rumour in the market that Tan Sri Syed Mokhtar eyeing a stake in SP Setia to leverage on it strong brand name in property market as both DRB-Hicom and Pos Malaysia Bhd have large land bank but lack a strong brand name. PNB has denied it received proposal from Syed Mokhtar to acquire it stake in SP Setia. However, the news indicated that it is still long way to go for both DRB-Hicom and Pos Malaysia Berhad to unlock value of their land bank.

Pos Malaysia Bhd has set aside more than RM150 million as capital expenditure (capex) for the financial year ended March 31, 2015 to be channeled towards new areas of postal services, information communication technology infrastructure, upgrading post offices and acquiring new vehicles.

Bursa Malaysia Securities had queried Efficient E-Solutions over the unusual market activity (UMA) in the trading of its shares after a sharp rise in its share price last week. It is surprise that UMA happen to Efficient E-Solution but not another affiliated company of Sing Post in Malaysia, GD Express. 

Previous related post : 

Singapore Post Limited benefited from recent price hike of Post Malaysia Berhad

SingPost acquisition of Axis Plaza heat up competition with Post Malaysia