In Part 1, we looked at how Singapore Post Limited (SGX: S08) and Pos Malaysia Bhd (KLSE: POS) are similar. As a quick recap of the previous article, we learned that: Both companies have similar business segments Both companies focus on growing their logistics/courier segments and Both have been consistent dividend payers for the last 5 years. Given that we have already looked at some similarities between the two companies, we will now look at some differences. Here, there are three main differences. Geographical segments: Despite having the word “Singapore” in its name, Singapore Post derives around half of…
As a quick recap of the previous article, we learned that:
- Both companies have similar business segments
- Both companies focus on growing their logistics/courier segments and
- Both have been consistent dividend payers for the last 5 years.
Given that we have already looked at some similarities between the two companies, we will now look at some differences.
Here, there are three main differences.
Despite having the word “Singapore” in its name, Singapore Post derives around half of its revenues from overseas. They come from Australia, Japan, Europe and the USA. See chart below:
Source SingPost 2016 Annual Report
On the other hand, a detailed search of the 2016 annual report of Pos Malaysia reveals that the company does not break down its revenues by geography because it operates in Malaysia.
Thus, we can see that SingPost is more diversified geographically, whereas Pos Malaysia is concentrated in Malaysia.
There are many strategies that a company can grow, whether through organic growth, acquisition, forming alliances like joint ventures or others.
For Singapore Post, one of the preferred strategies is growth through acquisition. This can be evident through the years of acquisitive growth, the most recent ones being the acquisition of US e-commerce provider TradeGlobal and Jagged Peak in 2015.
As for Pos Malaysia, the company has preferred the old school way of growing organically. Only up to recently that Pos Malaysia has decided to acquire the KL Airport Services Sdn Bhd (KLAS), together with a parcel of freehold industrial land in Shah Alam as part of its integrated logistic strategy.
Even then, this “acquisition” is more like corporate restructuring whereby DRB-Hicom, one of its major shareholders, is injecting its assets into Pos Malaysia in exchange for more equity.
Major shareholders are an important consideration for minority shareholders because these shareholders have significant influence over a company’s future direction.
Depending on the share ownership, a major shareholder can either “influence” – less than 50% but more than 20%, or “control” – more than 50% its investee.
With that, let’s look at the major shareholders of both companies.
Source SingPost 2016 Annual Report
Source Pos Malaysia 2016 Annual Report
Here, we see that SingPost is an associate of SingTel whereas Pos Malaysia is an associate of DRB-Hicom.
So what’s the difference?
Well, no difference until recently when DRB-Hicom exchanges its assets with more shares in Pos Malaysia. Upon the completion, DRB-Hicom’s equity interest in Pos Malaysia will increase to 53.5%!
In other words, DRB-Hicom will effectively “control” Pos Malaysia!
By going through both articles, hopefully, readers can have a better overview of both companies.
And for investors who believe in the e-commerce story, these are the 2 companies that ought to study in detailed!
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.