Due diligence on Pos Malaysia land

Thursday April 15, 2010
By B.K. SIDHU
Properties may be converted to unlock value
bksidhu@thestar.com.m
KUALA LUMPUR: Pos Malaysia Bhd is exploring ways to unlock the value of the land on which its post offices and other operations are located, including conversion of its use and ownership transfer to the postal company.
The 697 post offices, 32 mail-processing centres and over 300 delivery centres that Pos Malaysia operates in the country occupy over 250 acres of land, the bulk of which belongs to the Federal Land Commissioner.
“The charter says we can only operate postal services on these locations but we are thinking of a conversion and a change in ownership. The idea of conversion is to re-develop some of the parcels so that we can sell (them) and re-invest the funds in the company,” Pos Malaysia group managing director/CEO Datuk Syed Faisal Albar said.
As some of the land parcels are not deemed to be in strategic locations for postal operations, they could be leased out or hived off and even redeveloped.
“We will seek guidance on how to get around this land issue. We cannot at this juncture say exactly what the value of the landbank is as we need to conduct a due diligence for each property,” Syed Faisal told StarBiz in an interview.
He said globally, many of the postal companies, including those in Germany and Singapore, had rights to the land on which they operated and had in the past sold part of that land and redeveloped other portions for recurring income purposes.
Prime Minister Datuk Seri Najib Tun Razak recently announced as part of the New Economic Model that Khazanah Nasional Bhd would divest its 32.2% stake in Pos Malaysia. The Government will also look to revising the restriction on the usage of the land occupied by Pos Malaysia.
Conversion of land is not entirely new as it has been done in the case of KTM Bhd where parcels of land were converted for commercial development.
In Pos Malaysia’s case, the due diligence may well take up to three months and it will have to look at a model that best suits its needs and propose to the Government what can be done to unlock the value of the land and also ensure it provides recurring income to mitigate the declining volumes of its snail mail business.
Analysts view the conversion or transfer of land to Pos Malaysia as a sweetener to potential investors for Khazanah’s stake in the company.
It is unclear at this juncture if Pos Malaysia has to pay for the land but experts believe any payment would involve a lump sum at preferential rates.
Syed Faisal said there was “great” potential for the land but he would not elaborate.
“Getting the land will be a bonus as it is not featured in our three-year transformation plan,” he added. The plan, which began last August, is intended to transform the group into a more agile postal organisation that is cost efficient and customer-centric.


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