Yesterday, Parkson Retail Asia (PRA) and its wholly-owned subsidiary Parkson Myanmar signed a memorandum of agreement (MOA) with Yoma Strategic Holdings (YSH) and First Myanmar Investment Company (FMI) to establish a joint venture company (JVCo) to operate departmental stores under the brand of 'Parkson Department Store' in Myanmar.

Eyeing Myanmar market. PRA is a 67.7% owned subsidiary of Parkson Holdings (PHB). Under the MOA, Parkson Myanmar will hold 70% of the JVCo, YSH 20% while the remaining 10% will be owned by FMI. The JVCo is expected to have a paid-up capital of USD3m. The group's capital contribution of USD2.1m for the deal will be sourced from internally generated funds and is not expected to have any material impact on the group's performance.

1^st store in Yangon. The 1^st Parkson Department Store is likely to be located in the FMI Centre in the Padeban Township of Yangon, with a total built-up area of around 43,000 sq ft spread over four levels. The store is targeted to debut by March 2013 or at such other date to be agreed upon by all parties. With YSH and FMI's expertise in Myanmar's real estate sector, plus PRA's retail expertise in operating a modern department store, we believe the joint venture creates a win-win situation where all parties will get to ride on the wave of positive national transformation in Myanmar and penetrate the relatively untapped retail market.

Maintain BUY. After inking the deal with Odel Plc to venture into Sri Lanka by end-July, PRA is now setting its foot into Myanmar. We are not surprised by the deal since PRA has been looking to expand its business into the ASEAN region as part of its plans to become one of the region's largest department store chains. Maintain BUY with FV unchanged at RM5.51 as we continue to like Parkson's growth prospects and aggressive regional expansion.

Source: OSK