Morgan Stanley Likes Deutsche Post AG, Bpost NV Parcel Business

Deutsche Post AG DPSGY and bpost NV BPOST are maintaining healthy volume growth in parcel deliveries even as their revenue keeps pace. Morgan Stanley's Doug F. Hayes dissected the European parcel delivery sector and singled out the two players as favorites. "There appear to be two groups emerging in the space," Hayes said. "Those who can maintain volume growth without sacrificing mix, and those who cannot." Bpost, the Belgium national mail service which went public nearly 18 months ago, saw third-quarter parcel volume growth of 20 percent, even as revenue from the segment grew 26 percent. The shares changed hands recently on the Brussels stock exchange nealry unchanged at EU20.70 Deutsche Post, which went public 14 years ago, saw third-quarter parcel volume grow 9 percent while revenue from the segment grew by a like amount. Deutsche Post's American depositary receipts gained nearly 2 percent recently in over-the-counter trading. At the other end of the spectrum, Britain's Royal Mail ROYMF posted volume growth for parcels in the third quarter of just 2 percent, while revenue from the activity fell 4 percent. Royal mail "continues to suffer from an increasingly competitive market" following Amazon.com's AMZN entry into the British package delivery market, Hayes said. Royal Mail shares gained 1.6 percent recently. Royal Mail went public last year, and reportedly demanded "urgent" action recently concerning its universal service mandate in light of competitive threats. http://news.sky.com/story/1376022/royal-mail-profits-fall-21-percent-in-parcels-battle Hayes warned that Austrian Post, which trades on the Vienna stock exchange under the symbol POST, has recently seen declining free cash flow which could imperil its dividend growth.