(1)
5 –year business plan. The transformation
plan (2nd phase) 2013 to 2014 is mainly focus on diversifying its
income stream ie: digital business, expansion of direct mail business, finance
services and niche logistic/courier services.
(2) Double
digit growth. The new business segment will grow its revenue (double digit,
annually) for the next 5 years. The management reiterated that the new business
will contribute mildly to its FY13 earnings ie: financial shared services with
Maybank and RHB. At present, there are about 300 POS office branches provide
services like savings account deposit and loan application. POS will earn
agency fee on the volume of the transaction and it is expected to contribute 5%
to the topline.
(3) Islamic
Pawn-broking business. The other new business is Islamic Pawn Business. POS
will only accept jewelleries and gold and the financing is up to 70% with 6
months repayment period. The management sees huge demand for this segment in
the East Coast Malaysia while banks are mulling to open up more branches in
that area. This provides a good opportunity for POS ie: leverage on its branch
networks.
(4) CAPEX
at RM100m-RM150m a year. The management is planning to spend RM750m on
CAPEX for the next 5 years. Based on the last meeting, POS is likely to finance
the CAPEX via combination debt and equity. As at March 2012, its balance sheet
stood at a net cash position of RM409m. Based on its average free cash flow at
around RM150 to RM190m per annum POS is likely to gear up from 50% to 60% in
the next to year to finance the CAPEX. In this scenario, POS is still afford to
dish-out 70% pay-out for FY13 (Net div. yield at 2.8% to 4.1% for FY13 and
FY14, respectively).
(5) Unlocking
2acres of land in Brickfields. Based on average lease rental rate of RM5.00psf, property development project (4x plot
ratio) and 50% utilisation for rental, it will contribute about rental income
up to RM 10 Mil per Annum. To recap,
the utilisation of this piece of land is not restricted to the Postal Act. The
management reiterated that POS is actively looking at a few options to utilise
the land. Based on our findings, one of the options back in 2010 is to build
its headquarters which subsequently reduce its cost via free up rental cost for
the current office building at Dayabumi. Nonetheless, with the new plant in
Klang is up and running, it makes sense that POS to utilise the Klang space for
the headquarters and maximising the value of Brickfields land. We
understand that POS used to tender out the sale of the land back in 2008-2010
with the price at RM100m.
(6) New
business adds 10% topline per annum. We expect the contribution from the
new business will be around RM100m to RM200m per annum. We have factored in 9%
revenue growth in our FY13 forecast which mainly reserves for its new business
segment. This will be the KPI for the management for the next 5 years on top of
improving its PBT margin from 12% and new business ventures (digitalised
business).
(7) We
are maintaining out OUTPERFORM recommendation with unchanged TP at
RM3.70 based on DCF valuation (WACC 7%).
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Earnings Estimates
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|
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|
|
FYE 31 March (RMm)
|
2009
|
2010
|
2011
|
2012E
|
2013E
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2014E
|
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Revenue
|
902.6
|
1,014.9
|
1,199.3
|
1,481.7
|
1,156.0
|
1,250.3
|
|
Pre-tax profit
|
90.1
|
99.1
|
160.4
|
200.2
|
121.1
|
168.8
|
|
Net profit
|
68.2
|
72.5
|
115.4
|
138.9
|
89.6
|
129.4
|
|
Core Net profit
|
68.2
|
101.3
|
126.9
|
138.9
|
89.6
|
129.4
|
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EPS (sen)
|
12.7
|
13.5
|
21.5
|
25.9
|
16.7
|
24.1
|
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Core EPS (sen)
|
12.7
|
18.9
|
23.6
|
25.9
|
16.7
|
24.1
|
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Core EPS growth (%)
|
-17.7%
|
48.7%
|
25.2%
|
9.5%
|
-35.5%
|
44.4%
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Net DPS (sen)
|
9.4
|
8.0
|
10.3
|
12.8
|
8.6
|
12.5
|
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NTA/ share (RM)
|
1.0
|
1.0
|
1.2
|
1.1
|
1.0
|
1.0
|
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Net gearing (x)
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Net cash
|
Net cash
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Net cash
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Net cash
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Net cash
|
Net cash
|
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PER (x)
|
24.1
|
16.2
|
13.0
|
11.8
|
18.3
|
12.7
|
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P/NTA (x)
|
3.2
|
3.2
|
2.6
|
2.9
|
1.7
|
3.0
|
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Net div. yield (%)
|
3.1%
|
2.6%
|
3.4%
|
4.2%
|
2.8%
|
4.1%
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EV/ EBITDA (x)
|
12
|
9
|
7
|
6
|
8
|
6
|
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ROE (%)
|
8.5%
|
8.7%
|
12.2%
|
12.3%
|
7.3%
|
10.6%
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·
Price based on RM3.06