Thursday, August 29, 2013

Parkson Holdings : “Below Expectation” (M&A)

Parkson Holdings
Current Price (RM)RM3.30
New Fair Value (RM) RM4.29
“Below Expectation”

 Results Review
• Actual vs. expectations. Parkson Holdings Berhad’s  (Parkson) topline of RM801 million was flat at 0.2% y-o- y, however on q-o-q basis it declined by 14.1%, which bring cumulative revenue to RM3.5 billion, accounting 90% of our full year forecast. Net profit of RM56.5 million in 4Q13 dropped by double digits or 59.6% y-o-y and 60.5% q-o-q. The weak 4Q13 net profit saw its full year net profit fell by 34.8% to RM436.2 million, accounting only 65% from our full year forecast.

• Dividend. No dividend was announced during the quarter, however Parkson has paid 18sen dividend during FY13, translating into 44% dividend payout and 5.4% dividend yield.

• Challenging year. China and and Vietnam were a dampener to the Group’s earnings as weak sentiment from both countries in the absence key festival celebrations dented contributions. China and Vietnam’s net profit fell 47% q-o-q and 195% q-o-q to RM80.6 million and loss of RM2.4 million respectively.

• Malaysia stays positive. The Group’s same store sales growth (SSSG) managed to grow 5% in line the General Election 13’s goodies from government that continued to spur retail industries. Besides, Indonesia’s SSSG has beaten Malaysia’s operation after rising by 6% to RM13.1 million.

•Expanding retail network. The Group is planning to increase its gross floor area by approximately 10.8% in FY14 by opening five to six stores in China, two stores in Malaysia, two to three stores in Vietnam and three to four stores in Indonesia. Management is targeting SSSG in the low single digits for China, 7%-8% for Malaysia, 6%-7% for Indonesia and flattish for Vietnam in FY13.

• KL Festival gaining momentum. Reported a RM3.9 million net profit due to increasing occupancy rate that currently reached 80% level.

• Outlook. We foresee Parkson’s performance will rebound in the next quarter as major festive season coupled with year-end sales programme will assist Parkson to a large extent. Nevertheless, a weak retail sentiment from China and Vietnam will be on-going issue to the Group.

• Valuation & recommendation. We derive a new fair value of RM4.29 on Parkson as we roll our valuation into FY14, based on the last 5 year average P/E of 13.78x. We reiterate our BUY call on the stock.

Source/Extract/Excerpts/来源/转贴/摘录: M&A
Publish date: 28/08/13

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