KUALA LUMPUR: Pos Malaysia Bhd 's losses for its recent quarter came within expectations, say analysts, although its outlook for the near term remains challenging due to shrinking snail mail volumes and a highly competitive courier business.

       "The courier business is expected to improve on e-commerce demand but will continue to operate in a competitive environment pressured by price and cost challenges," said Kenanga Research in a note.

       It added that Pos's inability to close down post offices and its unionised workforce could mean profitability at its postal services segment is capped.

       Looking ahead to 2022, Kenanga said Pos Malaysia will continue executing its turnaround initiatives, improving both its service and its efficiency to create the platform to capitalise on the ongoing e-commerce growth opportunities.

       The brokerage maintained "market perform" with an unchanged target price of 72 sen.

       Meanwhile, RHB Research said the reopening of economies and ongoing turnaround initiatives should lead to further improvements ahead with volume improvement for Pos in 4Q and beyond while it pushes forward with cost optimisation initiatives and efforts to improve its service offerings in e-commerce.

       "Nevertheless, we believe this is a long-term process," it said on the postal service operator's attempts to capitalise on e-commerce growth opportunities.

       It noted also the recent appointment of a new CEO, Charles Brewer, whose vast industry experience will be helpful in bringing meaningful changes to turn the business around and return Pos to profitability.

       "We make no changes to our earnings estimates post results while expecting 4Q21 to see better volume improvements as restrictions are lifted and the economy reopens," it said in a report.

       The research firm maintained its "neutral" call on the stock with a slightly higher target price of 78 sen from 76 sen previously after inputing a 2% ESG premium to its discounted cash flow intrinsic value.