KUALA LUMPUR: Pos Malaysia Bhd may come out with some positive read-throughs from its upcoming second quarter (Q2) results, according to RHB Research.
This is despite the national postal company possibly announcing slightly wider core net losses quarter-on-quarter (QoQ) due to the Movement Control Order(MCO).
"Evident signs of a profitability flow-through from the recent surge in courier volumes alongside additional cost base reductions should bode well for the group's second half (2H20) earnings turnaround prospects following the easing of the MCO," said RHB Research in a report today.
The firm expects Pos Malaysia's Q2 core losses to come in at RM30 million-RM35 million(1Q20: -R27 million), primarily attributable to the MCO which adversely impacted its aviation and logistics businesses.
On the flipside, RHB Research said, the postal segment was expected to register narrower losses QoQ, supported by record high courier volumes which should partially offset the affected mail and retail services during the MCO period.
"We project a 46 per cent QoQ surge in average daily parcels to 500,000 in Q2 for its courier business, albeit likely lower in terms of revenue growth due to the shift in sales mix towards business-to-consumer volumes."
RHB Research said cost savings and sustained courier demand would buoy Pos Malaysia's recovery in 2H20 .
"Pos Malaysia's 2H20 outlook remains constructive in our view, supported by positive takeaways from its recent annual general meeting presentation.
"We believe management has proactively identified additional cost-down opportunities amid its aviation and logistics operations' partial downtime, while continuing to implement its digitalisation and automation initiatives which should drive greater cost efficiencies down the road."
RHB Research added that the exit trajectory for Pos Malaysia's postal segment also appeared promising heading into 2H20.
The firm expects June's courier volumes to have remained high at 400k,000 a day (1Q20: 343,000), while mailing and cross-border shipments are approaching pre-Covid-19 levels. '
RHB Research has kept its FY20-22 earnings, saying it expected a U-shaped recovery for Pos Malaysia with its aviation segment expected to remain challenging due to sluggish air traffic.
The logistics segment should pick up in tandem with the automotive industry's gradual recovery, it said.
It expects Pos Malaysia's core postal segment to swing back into profitability from Q3 as the group would be able to fully realise the benefits of its commercial mail tariff hikes given the resumption in business activities.
This should also sustain its courier business' bright prospects in 2H20 with business-to-business volumes rebounding on top of e-commerce's strong demand.