Awaiting right suitor for Transmile
Pos Malaysia Bhd (4634) is keen to sell its 15 per cent stake in Transmile Group Bhd but the challenge lies in finding an investor that can give the latter a new lease of life.
He added that there were no buyers in the open market even if Pos Malaysia were to sell on a daily basis due to Transmile's financially-troubled status.
"So we are just going to hold currently," he said.
Transmile, an air cargo operator which suffered a financial scandal in 2007, has a new management and board that are required to do a debt restructuring to regularise its financial position.
The challenge for Transmile is in it utilising the landing rights that it has and increasing its business volume, said Syed Faisal.
"In terms of air-express service, there is no one that owns the space within Asean. It is a space that Transmile can go into," he responded when asked if the Transmile's business model still works.
On possible further write-downs for its investment in Transmile, Syed Faisal said Pos Malaysia would be able to absorb it.
"We only have an exposure of RM5 million right now," he added.
Meanwhile, Syed Faisal said that Pos Malaysia will remain operationally profitable this year, taking into account the tariff hike effective this month.
As the group continues with its three-year Transformation Master Plan, it has earmarked to turn around its retail arm next.
"Many of the postal companies that have successfully transformed themselves have done so by making the retail arm an area of focus. Most postal companies worldwide are losing money in their retail business," Syed Faisal said.
A key area for Pos Malaysia's successful transformation hinges on turning its retail business profitable, which will take between two to three years.
One way of turning a postal service's retail arm profitable is through franchising, adopted by postal companies such as the New Zealand Post and Deutsche Post.
"This means that an entrepreneur owns the outlets and they sell postal services. So (this allows the postal company to) transfer the fix cost to a variable cost," said Syed Faisal.
However, Pos Malaysia will not consider adopting such a franchising model as it will lead to staff lay-offs.
Instead, the company will focus on increasing its high margin businesses such as the selling of insurance within its post office business.
"We are working to free up the counters to cater for higher margin businesses and automating the low margin businesses," he said.
It has introduced Pos Automated Machines (PAMs), a self-service terminal that handles simple posting transactions, stamp purchases and bill payments.
Aside from this, Pos Malaysia will also look to improve its services in East Malaysia while maintaining a lower cost structure.
"One of the initiatives is to have a post van that offers a full range of post office services such as renewal of road tax and insurance and updating of Amanah Saham books," said Syed Faisal.
Pos Malaysia has ordered 13 such vans to roam around the states of Sabah and Sarawak in an effort to reduce costs in terms of overheads and utilities as opposed to setting up static post offices.
"We can spend three to five hours per town and cover roughly five towns a week. The business volume does not justify opening up post offices and this will help us contain our costs," he added.
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