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Author: kiasutrader   |   Latest post: Thu, 29 Mar 2018, 04:34 PM

 

Parkson Holdings - Opening New Mall in Melaka

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THE BUZZ  

Yesterday, Parkson announced that its wholly-owned subsidiary Megan Mastika SB has entered into a conditional sale and purchase agreement with Dimensi Andaman SB for the  acquisition  of  15  acres  out  of  the  23.22  acres'  undivided  interest  of  land  located  in Kawasan Bandar XLII, Daerah Melaka Tengah, Negeri Melaka for a cash  consideration of RM98m.
OUR TAKE
A  mixed  development.  Dimensi  Andaman  plans  to  develop  an  integrated  commercial and  property  development  project  on  the  entire  23.2  acres  of  land  which  comprises  a shopping mall, serviced apartments and a boutique hotel. Parkson, via Megan Mastika, will be setting up the shopping mall. The purchase consideration will be funded internally and is expected to be complete by December 2012.
A sequel to KL Festival City's success. This is an opportunity for the group to develop a shopping mall at a strategic location in Melaka that has famous tourist attractions and is  in  an  area  that  is  planned  for  a  mixed  development  with  a  sea  frontage.  Parkson intends  to  develop  at  least  three  to  four  malls  by  2015;  its  first  mall,  KL  Festival  City located along Jalan Genting Klang, Setapak, was opened in Oct 2011, built with a capex of RM215m.
Still cash positive. As of June 2012, Parkson is in a net cash position of RM1770.4m. Given the cost of construction for the KL Festival City was RM215m for a land size of 8 acres,  it  will  cost  Parkson  an  estimated  RM403m  to  build  the  15  acres  new  Melaka shopping mall, assuming the same plot ratio. The cost of construction plus RM98m land acquisition  cost  will  reduce  Parkson's net cash position  to  RM1269.4m,  which  is  still  a huge cash pile.
Maintain  BUY.  Given the positive track record of the group's success with KL Festival City, we believe the new mall in Melaka will be beneficial for  Parkson in the long run to boost  its  property  and  management  income.  Maintain  BUY  with  a  FV  unchanged  at RM5.42.
Source: OSK
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Labels: PARKSON

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PARKSON 0.33 -0.005 (1.49%) 46,100 

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