KUALA LUMPUR: Pos Malaysia Bhd ’s shares fell over 6% early Monday after the company reported a 86% slump in profits in the first quarter ended June 30, 2018.





The counter, which is among the top losers, fell 6.24%, or 26 sen to RM3.91, the lowest since early July 2018.





Pos Malaysia’s net profit for the first quarter ended June 30, 2018 plunged to RM4.98mil, from RM35.92mil a year ago, due to lower revenue from its postal services segment coupled with increased costs.





Its quarterly revenue fell 3% to RM590.46mil from RM611.63mil a year ago. Earnings per share for the quarter stood at 0.64 sen against 4.59 sen posted previously.





Kenanga Research said Pos Malaysia’s first quarter financial results had “severely underperformed”, caused by poorer performances across all segments, coupled with the unusually high effective tax rate.





“The 1Q19 core earnings of RM3.1m (after stripping-off gains on disposals totalling RM1.8m) came in grossly below expectations, making up only 3% of our, and consensus, full-year earnings forecasts,” it said.





Kenanga has slashed FY19-20E earnings substantially by 75%-52% and expect Pos to suffer from an elevated operating expenditure business environment going forward.





The research house has downgraded Pos to "underperform" with a target price of RM3.10, given the uncertainty in earnings outlook and grossly unattractive price-to-earnings ratio valuations after reducing the earnings outlook.