Kenanga Research has maintained its UNDERPERFORM call on Pos Malaysia Bhd with a RM0.14 target price, citing persistent structural challenges in its traditional postal business, intense competition in the courier segment and insufficient cost savings to offset weakening core revenue.
The research house said its cautious stance was driven by three key concerns — the difficulty of turning around Pos Malaysia’s conventional mail business amid digitalisation, aggressive pricing competition from courier players such as J&T Express and Ninja Van, and cost-cutting measures that have yet to fully counter the deterioration in its core business.
Kenanga’s comments came after Pos Malaysia reported a 29% year-on-year narrowing in core net loss to RM60.7 million for 1HFY26, with the loss representing around 40% of the research house’s full-year forecast.
Kenanga noted that Pos Malaysia had shut down all 50 POS SHOP convenience store outlets nationwide in July 2026, ending the three-year retail experiment.
The research house estimated that the company had invested between RM15 million and RM20 million in the outlets, based on an estimated RM300,000 to RM400,000 cost per store, including inventories but excluding staff and land or store costs.
It expects the closure to generate RM5 million to RM10 million in cost savings over the next three years, which has already been incorporated into its forecasts.
Going forward, Pos Malaysia intends to focus on network optimisation to reduce the cost of end-to-end delivery, alongside service differentiation to accelerate market share gains in its parcel business.
Kenanga said the parcel segment offers better rates and growth prospects than traditional mail, which continues to face structural decline due to digitalisation.
The strategy also includes a transition towards agent-run networks as part of efforts to improve operating efficiency.
Kenanga said a sustained turnaround in Pos Malaysia’s postal business, together with the phasing out of irrational pricing behaviour among logistics players, would serve as potential re-rating catalysts for the stock.
Pos Malaysia received an initial RM50 million Universal Service Obligation (USO) facilitation fund from the Malaysian Communications and Multimedia Commission (MCMC) in 1QFY26.
However, the amount has not yet been reflected in its financial statements as details on the utilisation of the funds have yet to be finalised.
Kenanga said Pos Malaysia would continue engaging with the Government over the USO facilitation fund and expects the support to help keep the company’s losses below RM200 million annually for at least the next two to three years.
Despite its cautious outlook, Kenanga noted that Pos Malaysia’s logistics and aviation businesses have shown signs of improvement.
For 1HFY26, group revenue rose 8% year-on-year, supported by growth across postal, logistics, aviation and other services.
Logistics revenue increased 24%, while aviation revenue rose 14%, with the logistics segment benefiting from stronger contributions from automotive, freight forwarding, marine and warehousing operations.
Both of Pos Malaysia’s marine vessels were fully operational during the period.
Aviation services also continued to recover, supported by stronger air freight demand and Umrah charter flights, which additionally benefited its in-flight catering business.
However, Kenanga cautioned that the logistics division remained loss-making due partly to higher unrealised foreign exchange losses and finance costs.
Key risks to its UNDERPERFORM call include a potential privatisation of Pos Malaysia at a premium to the market price, a faster-than-expected return to profitability from successful cost rationalisation, and the company emerging stronger following consolidation in the courier sector as weaker players exit.
The research house said Pos Malaysia’s longer-term recovery would depend on whether its cost optimisation efforts can overcome the structural decline in conventional mail and whether its parcel business can continue gaining market share in an increasingly competitive logistics market.
