Pos Malaysia Bhd is back in the limelight, with its share price rallying after an announcement of a bumper dividend of 17.5 sen per share two weeks ago.
Besides the buzz about the recent hefty dividend payout, the question on everyone’s lips is who Khazanah Nasional Bhd will sell its 32.21% equity stake in Pos Malaysia to. The
stake had been put up for sale about a year ago. Based on last Friday’s closing price of RM3.58, the block of shares is worth RM619 million.
So far, Khazanah has not officially revealed the names of the parties that have submitted their bids for the stake in Pos Malaysia. The Edge Financial Daily has learnt that parties that have submitted the bids include DRB-Hicom Bhd, Scomi Group Bhd, a joint venture of Amanah Raya and Malaysia Pacific Corp Bhd, and Nationwide Express Courier Services Bhd.
Tan Sri Syed Mokhtar al-Bukhary is the name most often mentioned in connection with the equity stake in Pos Malaysia, which provides the country’s postal services and owns 697 post offices, outstripping any commercial bank in terms of branch network. DRB-Hicom Bhd is said to be the vehicle for Syed Mokhtar to acquire the stake.
There is even talk the tycoon is mulling a merger between Pos Malaysia and Bank Muamalat Malaysia Bhd, in which DRB-Hicom owns a 70% stake, in order expand his Islamic banking business. However, there is no official confirmation on the matter. DRB-Hicom bought over the stake in Bank Muamalat from Syed Mokhtar some years back. Khazanah holds the remaining 30% stake in the Islamic banking group, according to the bank’s website.
The traditional “snail mail” business of postal groups around the world, not just Pos Malaysia, is fast becoming obsolete in the age of email and instant messaging.
Analysts agree there is a need for Pos Malaysia to diversify its service portfolio. The provision of banking services through its branch network is probably one way to do so. Some postal groups, Singapore Post for example, have apparently done so.
Already Pos Malaysia has strategic tie-ups with Malayan Banking Bhd (Maybank) and RHB Bank Bhd, in a move to diversify its earnings base.
The group’s partnership with Maybank will provide selected over-the-counter banking services, such as cash deposits and withdrawals for savings account holders, in addition to loan repayments in over 400 post offices by year-end. Its tie-up with RHB Bank involves the provision of the shared banking services in over 300 post offices, eventually leading to the opening of “Easy by RHB” kiosks at selected post offices.
Analysts say with Pos already offering selected banking services, the notion that it may eventually offer more of such services or partner more banks is not an unusual one.
“Although Pos Malaysia offers a limited range of banking services on behalf of Maybank and RHB Bank, we do not see this as a hindrance to Bank Muamalat Malaysia Bhd establishing a meaningful strategic tie-up with Pos Malaysia since it could still provide a wide array of banking services and function like an actual bank, with its own staff,’ OSK Research says in a report.
Some analysts reckon that by offering a wider variety of services, such as Islamic banking, the postal group may achieve economies of scale. Forming partnerships for the provision of banking services would be a win-win deal for Pos Malaysia and banks. The postal group will earn more fees, while the banks can leverage on a wider branch network to reach more customers, especially in rural areas.
However, some quarters note that a partnership with banks is totally different from the ownership of a bank.
Should Pos Malaysia acquire a stake in a bank, perhaps the most relevant question would be the pricing of the asset and how it affects minority shareholders. There is nothing wrong with a postal group buying into a bank. Indeed, Deutsche Post owns Postbank in Germany. The German postal group is doing well and is considered one of the postal groups that has successfully transformed itself.
But will there be earnings enhancement or dilution? Will such a deal, if it happens to be a related-party transaction, be at arm’s length and at a fair price? These are the issues that concern Pos Malaysia’s minority shareholders.
Apart from its the extensive branch network and ballooning cash pile, analysts say the other hidden values of Pos Malaysia are in its large landbank and property assets.
Should the government relax the restrictions on the use of land that the Federal Land Commission (FLC) has given to Pos Malaysia, the redevelopment of some of the land could probably earn the group hefty gains.
Currently, the FLC owns a sizable chunk of the land where Pos Malaysia’s post offices are located. Pos Malaysia has a leasing arrangement with FLC, hence it is bound by the restriction that the land can only be utilised for the provision of postal services.
“The rationalisation of Pos Malaysia’s land, for example the tract near KL Sentral which is in a prime location, would be good,” says a fund manager. OSK Research points out in a recent note that some sizeable plots of land owned by Pos Malaysia are in Bukit Raja, Brickfields, Bangi and Salak Tinggi.
“However, all this is dependent on the (amendment of) the Postal Land Act,” an analyst comments, adding that, thus far, there have been no updates on the proposed amendment to the Act which would allow additional non-post-related services to be carried out on the land. Analysts concur that, if the amendments are revised favourably in terms of land use, Pos Malaysia’s valuation would increase.
Again, this raises the question of how the incoming shareholder(s) leverage the landbank, should the Act be amended.
Asset stripping is probably the last thing that minority shareholders want to see happen in Pos Malaysia.
And if the Act is to be eventually amended, would it be better for Khazanah to delay the sale of Pos Malaysia, so that the additional land-valuation gains accrue to the government, rather than a private entity?
Khazanah’s managing director Tan Sri Azman Mokhtar has stressed that the government investment arm wants a shareholder who is “fit and proper” and should have “the right entrepreneurial spirit given the postal transformation trends globally”.
Pos Malaysia’s minority shareholders certainly hope that Azman will walk the talk. -Written by Commentary by Melody Song of theedgemalaysia.com
No comments:
Post a Comment