Wednesday, November 20, 2013

Parkson Retail Asia - Look for a stronger 2H (CIMB)

Parkson Retail Asia -
Current S$0.97
Target S$1.51
Look for a stronger 2H

We see no reason to continue being negative on Parkson following the recovery in Malaysia's profitability, although it is still not fully back to normal. Management is positive on 2H and the trends this quarter suggest that the optimism is justified. 1QFY6/14 core net profit was in line at 24% of our and consensus FY14 estimates. We trim our estimates by 1% on housekeeping matters. We upgrade to an Outperform from an Underperform on the back of Malaysia's recovering profitability and depressed share price. Our target price is raised as we roll over to 20x CY15 P/E (prev. 22x CY14), in line with regional peers. Catalysts are improving sales figures.


1QFY6/14 core net profit was in line at 24% of our and consensus FY14 estimates. We trim our estimates by 1% on housekeeping matters. We upgrade to an Outperform from an Underperform on the back of Malaysia's recovering profitability and depressed share price. Our target price is raised as we roll over to 20x CY15 P/E (prev. 22x CY14), in line with regional peers. Catalysts are improving sales figures.

1Q14 highlights
Parkson recovered well from last quarter's plunge despite the continuing economic headwinds in Malaysia. Malaysia's PBT recovered from the low of S$5.3m last quarter to a solid S$12.5m this quarter, mainly due to the easing of promotions. As a result, PBT margins improved from 6.6% to 15% qoq. To put this figure into context, it is just slightly below what it was averaging at S$14.5m before last quarter. Indonesia's consumer spending remains robust with headline SSSG coming in at 3.9% yoy. This was achieved despite the inflationary pressures and would have been higher at 7% if not for one store that was affected by the opening of a new mall. The recovery in retail spending in Vietnam remains patchy; however, SSSG improved from -6.3% to -1.1% yoy.

Optimistic for 2H
Management is guiding for a low single-digit SSSG in Malaysia for the latter half of this year, which we think is achievable given this quarter's recovery. Furthermore, the three stores that were closed for renovations will re-open. Indonesia could see a high single-digit SSSG for the full year, while Vietnam could see low single digits.

Upgrade to an Outperform
Its share price has fallen by 30+ percent following our downgrade in 4Q13. Catalysts are to come from a recovery in Malaysia.



Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 17/11/13

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