Tuesday, September 3, 2013

Parkson Holdings : Slowdown in all markets (DBSV)

Parkson Holdings
HOLD RM3.30
KLCI : 1,701.24
Price Target : 12-Month RM 3.30 (Prev RM 4.45)
Slowdown in all markets

4Q13 net profit of RM30m was below expectation
Earnings were dragged by weaker consumer spending in China and Malaysia
Cut FY14-15F EPS by 22%-39% to reflect slower earnings growth at all key markets
Maintain HOLD with lower RNAV-based RM3.30 TP

Highlights
4Q/FY13 earnings below expectations. Parkson recorded 4QFY13 net profit of RM30.2m (-63% y-o-y, -61% q-o-q) on the back of RM802m revenue (+0.2% y-o-y, -14% q-o-q). This is only 78% of our full year net profit.


Earnings were dragged by China operations/Parkson Retail Group (PRG) which booked RM80.7m EBIT in the 4Q (-41% y-o-y, -47% q-o-q) with 0.7% same-store-sales growth (SSSG; vs. 3QFY13: - 2.8%). This was mainly attributed to weaker consumer sentiment arising from macroeconomic uncertainties in China.

Similarly, its second-largest revenue contributor, Malaysia, experienced softer SSSG of 0.6% in the quarter (vs. 8.6% in the Jan-Mar quarter), which resulted only RM8.2m EBIT (-52% y-o-y, -71% q-o-q). This was also due to weaker consumer spending after the May election.

For the year, SSSG for China, Malaysia, Indonesia and Vietnam was -1%, 5%, 6% and -1%, respectively.

Our View
Cut EPS by 22%-39%. We slashed FY14-15F EPS to 22.5-23.3 sen after adjusting for the following: i) PRG: cut FY13-14F earnings by 26-27%; and ii) PRA: cut FY14-15F earnings by 20- 32%. The cuts are premised on slower SSSG as a result of weaker consumer spending and a cautious economic outlook especially for China.

Recommendation
Maintain HOLD. We lowered TP to RM3.30, based on RNAV valuation after slashing PRG’s TP to HKD2.92 (from HKD3.75) and rolling forward the valuation base to CY14. We remain cautious of the Group as PRG continues to experience weak earnings with potential downside to SSSG. Nevertheless, our stock call remains a Hold as its share price (down 9.6% since the release of PRG’s results on 16 Aug) would have discounted the poor results already.



Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 28/08/13

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