Pos Malaysia seeks tie-up with Alibaba to tap online retail boom

A Pos Malaysia employee sorting mail in a post office in Kuala Lumpur. Increased parcel deliveries due to online shopping drove a 40 per cent jump in the company's profit in the fiscal first quarter.
A Pos Malaysia employee sorting mail in a post office in Kuala Lumpur. Increased parcel deliveries due to online shopping drove a 40 per cent jump in the company's profit in the fiscal first quarter.PHOTO: BLOOMBERG

KUALA LUMPUR • Malaysia's biggest postal company is seeking a more direct role in providing logistics services to Chinese e-commerce giant Alibaba Group Holding, tapping a boom in online retailing.

Pos Malaysia plans talks with Alibaba this month on bypassing the middlemen when shipping goods sold on its platforms, said its chief executive officer Mohd Shukrie Mohd Salleh. 

Surging parcel deliveries for online shopping drove a 40 per cent jump in profit in the fiscal first quarter, and full-year earnings will be higher than a year earlier, he said.

"My focus is still e-commerce, and it is driving the logistics business. When e-commerce is booming, somebody needs to deliver these items," said Mr Shukrie, 42, in an interview on Sept 27. He was to meet Alibaba and other market players in China in October.

Postal companies in Asia are remodelling themselves by expanding overseas to meet rising demand spurred by a global retail e-commerce market valued at about US$1.2 trillion (S$1.65 trillion) by the Universal Postal Union.

Pos Malaysia, which started work in the early 1800s delivering mail by bicycle, is the top performer this year among 14 global courier stocks with a market value of at least US$500 million, recording a total return of 49 per cent, beating United Parcel Service and FedEx.

Pos Malaysia stock has soared 85 per cent from a February low as record earnings from its courier business and a potential increase in tariffs for the first time in six years buoyed the shares. 

The company is valued at 25 times its 12-month projected earnings, versus 18 for UPS, the world's most valuable courier company.

Alibaba said its delivery affiliate Cainiao Smart Logistics Network "works collaboratively with logistics participants to enhance customer experience and operation efficiency". "It is natural we talk to industry participants," it said in an e-mailed statement.

Singapore Post, which counts Alibaba as its second-biggest shareholder, said a year ago it plans to expand freight services and warehouses in the US and Europe as Asia's emerging middle class drives online purchases from overseas.

"The potential is quite huge for e-commerce," said Hong Leong Investment Bank analyst Lim Sin Kiat.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on October 12, 2016, with the headline 'Pos Malaysia seeks tie-up with Alibaba to tap online retail boom'. Print Edition | Subscribe