TARIFF HIKE TO LIFT POS MALAYSIA?
Positive announcement before year end may lead to re-rating of stock, say analysts
POS Malaysia Bhd’s share price may exceed RM1.93 if the proposed increase in postal tariffs materialises.
Analysts believe any positive announcement on the tariff hike would be a catalyst to Pos Malaysia’s share price.
Should the announcement be made before the end of the year, there could be a re-rating of the stock and its target price, they said.
Malaysian Association of Technical Analysts adviser Nazarry Rosli said Pos Malaysia would need a strong catalyst for a rally and the tariff hike could provide that.
Pos Malaysia had been trading at its bottom level of RM1.50 before moving above the 50-day simple moving average level of RM1.67.
“It is now trying to test the 200day simple moving average level of RM1.80 in the short term. This
is a good technical outlook for Pos Malaysia,” Nazarry told the New Straits Times.
“Volume has also increased, indicating that the shares are in demand. The tariff hike is needed to ease pressure on Pos Malaysia’s high operating expenses.”
Last week, Pos Malaysia showed signs of recovery after trading around its bottom point. The stock, which has been trading below RM1.80 since mid-July, rose 5.42 per cent to RM1.75 on Friday following a positive technical outlook.
It was reported last week that postage may get costlier. Communications and Multimedia Minister Gobind Singh Deo said the ministry was awaiting a report from Pos Malaysia on proposed new tariffs.
Public Investment Bank said Pos Malaysia’s improving technical indicators signal a reasonable entry level, with anticipation of improvements in momentum and trend in the near term.
“Should the resistance level of RM1.72 be broken, it may continue to lift the price higher to resistance levels of RM1.84 and RM1.93,” it said in a note.
However, failure to hold on to the support level of RM1.56 may indicate weakness in the share price and hence, a cut-loss signal, it added.
Without the tariff hike, the fundamental outlook is murky for Pos Malaysia, as suggested by analysts’ calls and target prices.
According to Bloomberg data, there were five “sell” and one “hold” calls on Pos Malaysia. There was no “buy” call.
Kenanga Research said in a report Pos Malaysia is suffering from elevated operating expenditure.
“Intense competition, coupled with expansion efforts, has led to stagnating margins, thus causing profit deterioration despite volume and revenue growth.”
Given Pos Malaysia’s inability to close down post offices and losses in its postal services segment, the overall losses were expected to continue, it added.
The courier business continues to operate in a competitive environment, pressured by price and cost challenges.