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HLIB Research says Pos Malaysia to be hit by higher cost structure, cuts target price

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HLIB Research says Pos Malaysia to be hit by higher cost structure, cuts target price Empty HLIB Research says Pos Malaysia to be hit by higher cost structure, cuts target price

Post by Cals Sun 21 Sep 2014, 18:45

HLIB Research says Pos Malaysia to be hit by higher cost structure, cuts target price
Business & Markets 2014
Written by theedgemalaysia.com   
Friday, 19 September 2014 08:49

KUALA LUMPUR (Sept 19): Hong Leong IB Research maintained its Hold rating on Pos Malaysia Bhd (POSM) with a lower target price of RM4.60 and said the national courier would be hit by higher cost structure.
In a note Friday, the research house said POSM would be incurring steep increase in costs, under its expansion plan.
It said this included increasing staff numbers to support courier segment expansion; increasing air transportation cost as Pos expands international services; and utilities, due to revised electricity tariff rates.
“Government initiatives to cut subsidies will further increase Pos transportation (fuel) and utility costs (electricity).
“Despite management’s upbeat sentiment on revenue growth, we believe Pos to be hit with high cost structures in the short term.
“Maintain Hold on POSM with lower target price of RM4.60 based on 16x PE for FY03/16,” it said.
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