Parkson Holdings (PHB) full year 2013 results met 101% revenue and 98%
of our FY13 estimates. Despite China’s weak performance as per our
August 19th report, the group managed to end the year on a lighter note.
YTD revenue rose marginally to RM5,301.7m (+2.0% YoY, -14.1% QoQ),
PATAMI registered RM240.5m (-62.9% YoY, -60.6% QoQ). We believe at this
juncture, Parkson’s performance has already bottomed-out and hence
should begin to gradually improve. We have revised our recommendation to
Outperform with unchanged TP of RM4.17
premised on our FY14F sum-of-parts valuation, as we do like Parkson for
its i.) strong balance sheet – net cash of c.RM1bn, ii.) growth plans
to expand PRA’s contribution and its property and investment divisions
which would see more value in the medium-term, and iii.) catalyst of
most Asean governments encouraging consumption growth.
Marginal growth of 2% YoY. Albeit ailing global sentiments coupled with weaker discretionary spending, PHB’s revenue grew 2% YoY. Same-storesales growth (SSSG) registered; China -1%, Malaysia +4.5%, Vietnam -0.7% and Indonesia +5.6%. We expect SSSG to improve going forward as the number of new stores would begin contributing to SSSG next year. Sales is furthermore expected to improve from China as its flagship stores in Shanghai (re-opening September CY13) and Beijing (re-opening 3QCY13) are undergoing its first phase of refurbishment to enhance the competitiveness and productivity of stores to stimulate SSSG. Property and investment holding division which currently comprises of KL Festival City, registered 98% occupancy rate. With improved efficiencies, the division translated to RM33m in revenue.
Lower operating margin. Attributed to i.) new store openings, weaker sales growth in China and Vietnam, and losses from existing stores. 7 new stores (4 – China, 1-Malaysia, 1-Indonesia, 1-Myanmar) were opened during the financial year. ii.) higher rental expense +30.1% YoY. iii.) general rise in wages affecting staff costs +19% YoY.
Strategies. i.) expansion plans include opening in China 5-6 stores, and 10 stores throughout Southeast Asia, ii.) expand the Sri Lanka operations through new store openings and development of own floor space, iii.) upgrade existing brand mix and revamp existing stores, and iv.) to maintain healthy SSSG by improving floor space productivity and targeted promotional activities. SSSG targets – China: low-single-digit, Malaysia: 5- 6%, Vietnam: 5-7% & Indonesia: 8-10%).
Source: PublicInvest Research - 28 Aug 2013
Marginal growth of 2% YoY. Albeit ailing global sentiments coupled with weaker discretionary spending, PHB’s revenue grew 2% YoY. Same-storesales growth (SSSG) registered; China -1%, Malaysia +4.5%, Vietnam -0.7% and Indonesia +5.6%. We expect SSSG to improve going forward as the number of new stores would begin contributing to SSSG next year. Sales is furthermore expected to improve from China as its flagship stores in Shanghai (re-opening September CY13) and Beijing (re-opening 3QCY13) are undergoing its first phase of refurbishment to enhance the competitiveness and productivity of stores to stimulate SSSG. Property and investment holding division which currently comprises of KL Festival City, registered 98% occupancy rate. With improved efficiencies, the division translated to RM33m in revenue.
Lower operating margin. Attributed to i.) new store openings, weaker sales growth in China and Vietnam, and losses from existing stores. 7 new stores (4 – China, 1-Malaysia, 1-Indonesia, 1-Myanmar) were opened during the financial year. ii.) higher rental expense +30.1% YoY. iii.) general rise in wages affecting staff costs +19% YoY.
Strategies. i.) expansion plans include opening in China 5-6 stores, and 10 stores throughout Southeast Asia, ii.) expand the Sri Lanka operations through new store openings and development of own floor space, iii.) upgrade existing brand mix and revamp existing stores, and iv.) to maintain healthy SSSG by improving floor space productivity and targeted promotional activities. SSSG targets – China: low-single-digit, Malaysia: 5- 6%, Vietnam: 5-7% & Indonesia: 8-10%).
Source: PublicInvest Research - 28 Aug 2013
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