Pos Malaysia’s maiden cross-border e-commerce collaboration a positive development
KUCHING: Pos Malaysia Bhd’s (Pos Malaysia) maiden cross-border e-commerce collaboration with Tigers Global Logistics (M) Sdn Bhd (Tigers) has drawn positive views from analysts.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) was positive on this corporate development by Pos Malaysia as the e-commerce market accounts for approximately 30 to 33 per cent of the group’s total revenue which is gaining momentum.
According to Kenanga Research, as at the first nine months of 2017 ( 9M17), e- commerce accounted for an estimated 32 per cent of group revenue which is gaining importance due to the declining traditional mail segment.
“The collaboration will allow Pos Malaysia to ride on the fastgrowing e- commerce services sector which presents an enormous opportunity for global logistics players to provide total integrated logistics services to eretailers that require customised solutions for their complex supply chain.
“Pos Malaysia has the capability given that they already have first-mile and last-mile presence with KL Airport Services (KLAS) and Pos Malaysia,” the research arm said.
Kenanga Research kept its financial year 2017 estimate (FY17E) and FY18E earnings unchanged as the research arm has sufficiently factored in such earnings contribution into our earnings model.
The research arm was unable to quantify any earnings enhancement for now and only expected meaningful contribution over the medium to longer term.
“For illustrative purposes, assuming an additional RM200 million per annum revenue from this tie-up and a gross profit margin of 10 per cent which is an additional RM20 million gross profit accrue to Pos Malaysia,
“Tigers is a global logistics and transportation company that specialises in supply chain solutions, e-Fulfilment and transportation by air, sea and road,” it said.
Kenanga Research highlighted that under this collaboration, Pos Malaysia will have the mandate to manage the entire supply chain process, including customs clearance, product handlings, pick and pack as well as last mile delivery and in turn, Tigers will be responsible for the continuous investment in hardware, network and systems.
The research arm noted that following this collaboration, the first ever regional e-Fulfilment Hub is expected to be established nearby Low-Cost Carrier Terminal in Sepang.
“This hub is expected to benefit both international and local ecommerce players and customers across 30 countries in the Asia-Pacific region where it will be used to manage office of exchange, air conveyance and e-Fulfilment capabilities,” the research arm said.
Kenanga Research believed the share price of Pos Malaysia has already factored in this latest corporate development coupled with the recent news flow of the Digital Free Trade Zone and its valuations are running ahead of fundamentals.
Looking ahead, Kenanga Research expected Pos Malaysia to continue to be affected by weakness in conventional mail volume and the low margin trans-shipment business.
“Courier service demand is expected to improve and overcome the declining mail segment over the longer term due to the e-commerce boom.
“The synergy from KLAS is only expected to bear fruits over the longer run as capex and expansion costs could be a drag on earnings,” the research arm said.
It added that in an effort to enhance customer experience, Pos will introduce more 24/7 e-commerce convenient touch points by introducing Pos Laju EziBox (parcel locker service), Pos Laju EasyDrop (drop-off facility) as well as enhancement of facilities at all Pos Laju Centres and post offices nationwide.