Pos a natural fit for DRB-HICOM
DRB-HICOM has emerged as a substantial stakeholder in the national postal company, having earlier paid RM622.8 million or RM3.60 a share for the stake.
Kuala Lumpur: DRB-HICOM Bhd's purchase of a 33.2 per cent stake in Pos Malaysia Bhd is to strengthen its own services sector and help reduce reliance on the automotive sector, said group managing director, Datuk Mohd Khamil Jamil.
Over the weekend, DRB-HICOM informed the stock exchange it has emerged as a substantial stakeholder in the national postal company, having earlier paid RM622.8 million or RM3.60 a share for the stake.
"The automotive sector is more sensitive to economic cycles. Buying Pos allows us to enhance the services sector. The extensive post office network will provide the reliable channels for our banking and insurance products," Mohd Khamil told Business Times in an interview.
DRB-HICOM has business interest in the insurance sector, as well as a 70 per cent stake in Bank Muamalat Bhd, the country's second oldest purely Islamic bank.
"Pos is a natural fit for our services sector. Also, we have the experience in turning around and improving business models of oligopoly and concession businesses such as Puspakom and Alam Flora," said Mohd Khamil.
DRB-HICOM's automotive business generated RM3.66 billion in sales, while the serices sector generated RM1.81 billion in the financial year ended March 31 2010.
Mohd Khamil said the services sector will complement the auto sector in terms of earnings, though he expects in the long term, DRB-HICOM's defence sector will be a significant contributor to the group's earnings.
Last month, DRB-HICOM received a RM7.5 billion defence contract from the government.
"We have discarded the agency way of doing business. As it is, we have exported 190 handalan trucks to our neighbour Brunei and another 36 trucks to Timor Leste," said Mohd Khamil.
Mohd Khamil said since DRB-HICOM is also involved in the property development sector, it will be able to lend its expertise to Pos Malaysia to assess and unlock the potential values of the postal company's landbank.
One condition of the DRB-HICOM purchase of the Pos Malaysia stake is the conversion of 16 plots of identified land owned by the Federal Lands Commissioner and leased to Pos Malaysia for postal services into commercial use.
The most valuable land that falls under the Federal Lands Commissioner's ambit is the 1.25 hectares of postmen quarters behind the Pudu Jail, which could generate a gross development value of a couple of hundred million ringgit.
Meanwhile, analysts said that they will be keeping a close watch on DRB-HICOM's full year results which are expected to be announced this month. They are expecting a good year for the company, having posted a net profit of RM400 million for the nine months ended 31 December 2010.
Net profit for the financial year ended March 2010, meanwhile, had stood at RM543.26 million.
Their main curiosity is piqued on what DRB-HICOM intends to do with its tax credits, that expires on December 31 2013.
As at March 31 2010, DRB-HICOM tax credits were enough to pay RM240 million of its earnings as franked dividends.
In addition, the company has tax exempt income of RM159.84 million available to frank as tax exempt dividends, information obtained from its annual report show.
Kuala Lumpur: DRB-HICOM Bhd's purchase of a 33.2 per cent stake in Pos Malaysia Bhd is to strengthen its own services sector and help reduce reliance on the automotive sector, said group managing director, Datuk Mohd Khamil Jamil.
"The automotive sector is more sensitive to economic cycles. Buying Pos allows us to enhance the services sector. The extensive post office network will provide the reliable channels for our banking and insurance products," Mohd Khamil told Business Times in an interview.
DRB-HICOM has business interest in the insurance sector, as well as a 70 per cent stake in Bank Muamalat Bhd, the country's second oldest purely Islamic bank.
"Pos is a natural fit for our services sector. Also, we have the experience in turning around and improving business models of oligopoly and concession businesses such as Puspakom and Alam Flora," said Mohd Khamil.
DRB-HICOM's automotive business generated RM3.66 billion in sales, while the serices sector generated RM1.81 billion in the financial year ended March 31 2010.
Mohd Khamil said the services sector will complement the auto sector in terms of earnings, though he expects in the long term, DRB-HICOM's defence sector will be a significant contributor to the group's earnings.
Last month, DRB-HICOM received a RM7.5 billion defence contract from the government.
"We have discarded the agency way of doing business. As it is, we have exported 190 handalan trucks to our neighbour Brunei and another 36 trucks to Timor Leste," said Mohd Khamil.
Mohd Khamil said since DRB-HICOM is also involved in the property development sector, it will be able to lend its expertise to Pos Malaysia to assess and unlock the potential values of the postal company's landbank.
One condition of the DRB-HICOM purchase of the Pos Malaysia stake is the conversion of 16 plots of identified land owned by the Federal Lands Commissioner and leased to Pos Malaysia for postal services into commercial use.
The most valuable land that falls under the Federal Lands Commissioner's ambit is the 1.25 hectares of postmen quarters behind the Pudu Jail, which could generate a gross development value of a couple of hundred million ringgit.
Meanwhile, analysts said that they will be keeping a close watch on DRB-HICOM's full year results which are expected to be announced this month. They are expecting a good year for the company, having posted a net profit of RM400 million for the nine months ended 31 December 2010.
Net profit for the financial year ended March 2010, meanwhile, had stood at RM543.26 million.
Their main curiosity is piqued on what DRB-HICOM intends to do with its tax credits, that expires on December 31 2013.
As at March 31 2010, DRB-HICOM tax credits were enough to pay RM240 million of its earnings as franked dividends.
In addition, the company has tax exempt income of RM159.84 million available to frank as tax exempt dividends, information obtained from its annual report show.
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