We re-iterate our BUY recommendation on Parkson Holdings Bhd (PHB), with an unchanged fair value of RM6.20/share based on our sum-of-parts valuation.
PHB wrapped up FY12 with a sequentially lower 4Q net profit of RM78mil (QoQ: -24%), largely due to seasonal factors given the absence of the CNY festivity this quarter. The results are broadly in line with our full-year forecast and consensus estimates.
PHB posted higher earnings for FY12, rising 8% YoY on back of an 18% increase in revenue. This was largely attributed to 13 new store openings (China: +8, Malaysia: +2, Indonesia: +2, Vietnam: +1) and maiden full-year contributions from inclusion of Indonesian stores. Bottomline growth trailed topline due to a 4.3ppts-decline in EBIT margin stemming from higher costs mainly in the opening of new stores.
Against a backdrop of a challenging outlook, the group recorded a relatively weaker SSSG for FY12, with China at 6%, and 9% in Malaysia, Vietnam and Indonesia. Nonetheless, this is still within our recently-revised expectations of 8%-10% (FY11 SSSG - China: 12%, Malaysia: 10%, Vietnam: 21%).
Looking ahead, whilst performance of stores in Vietnam is likely to remain weak in the medium term, we anticipate China's SSSG to stage a recovery in 2H2012 as the country's retail industry rebounds from its sector trough. Meanwhile, operations in Malaysia & Indonesia are expected to be stable, given healthy consumer spending.
Our long-term bullish view of PHB's prospects remains unchanged, underpinned by the group's solid plans for a 14% to 15% expansion in GFA per annum (p.a.) on the back of new store openings (China ' 8 to 10, Malaysia ' 2, Indonesia ' 4 to 5, Vietnam ' 2, Cambodia ' 1). As it is, a pipeline of five additional stores is being targeted for opening in China by end-2012.
Current valuation at 12.5x PER is attractive, well below the stock's 5-year mean of 14x and local peer Aeon Co (M) Bhd's (AEON Mk Equity, Non-rated) 15x.
PHB remains as the cheaper proxy for tapping into Southeast Asia's robust consumption play. Potential share price catalysts include:- 1) Faster-than-expected new store rollouts and; 2) Better-than-expected cost management initiatives.
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 3943 views | 4 d ago
0:17
New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....