PHB's 1HFY12 results were below consensus but well within our estimates. Revenue and net profit improved by 20.5% and 15.3% y-o-y respectively, mainly driven by the opening of new stores anddecent SSS growth, but EBITDA margin was thinner on lower other operatingincome. Given the group's aggressive plan to enhance its earnings, we maintainBUY on the stock, with an unchanged FV of RM6.42.
Within our estimate.Parkson's (PHB) 1HFY12 revenue and netprofit stood at RM1.7bn and RM196mrespectively, up 20.5% and 15.3% y-o-y bolstered by the opening of new stores andimproving operating efficiency. Thestronger results were underpinned by a 19.4% y-o-y surge in commissions fromconcessionaires and 19.6% yo-y growth in direct sales. China (+10%), Malaysia (+12%), Vietnam(+16.2%) and Indonesia (+9%) all saw decent SSS growth y-o-y, trending on trackwith management's SSS guidance (China: mid-to-high single digit, Malaysia:8-10%, Vietnam: 15-20%, and Indonesia: 8-10%). Vis-''-vis 1QFY12, revenue and net profit expanded by 15.1% and 17.1%due to stronger consumer spending during the festive and holiday season. Note thatduring this quarter, the property and investment holding division contributedrevenue of RM5.2m from managing its first local self-owned retail mall at KLFestival City, which commenced business in Oct 2011.
Margin moderates.Merchandise gross margin was a tick lowerby 10bps, down from 19.7% to 19.6% y-o-y while EBITDA margin shrank 3% y-o-y to 30.8%, no thanks to lower other operatingincome. Other operating income in 1HFY11 incorporate an exceptionalgain of RM30.5m from the group's USD125m 7.125% High Yield Notes and a grossgain on disposal of its Yangzhou store.
More expansion.PHB plans to extend its network by opening 8-10 stores in China, 2 stores inMalaysia, 2-3 stores in Vietnam and 4-5 stores in Indonesia. It is conserving cashfor potential M&As, including retail property acquisitions. With more newstores in the pipeline, we are optimistic that the group will deliversatisfactory results going forward.
Maintain BUY.With more new stores in the pipeline, we are of the view that the group shouldcontinue to deliver satisfactory resultsin the future. Maintain BUY, with our FV unchanged at RM6.42.