Yesterday, Parkson Holdings Berhad (PHB)’s 67.6%-owned subsidiary, Parkson Retail Asia (PRA) announced that it will enter into a 70:30 joint venture (JV) with Superb Apparel Supply SB to establish new concept stores under the brand name “LOL” which will sell affordable fashion apparel to the mass market. (Source: Bursa Malaysia)

Comments: We understand that the JV is line with the group’s efforts in diversifying its income stream. We believe that this JV complements and further enhances its product offerings. PRA would have to fork out a total sum of SGD0.23m and this would be from internally generated funds. We believe that funding will not be an issue as PRA is sitting on a net cash position of ~SGD202m as at 1H15. All in, while we are optimistic on this in the long-term, we believe that the earnings impact from this JV will be very minimal in the near to mid-term. Maintain HOLD with unchanged RNAV based TP of RM1.07.

Source: Affin Hwang Capital Research - 5 Nov 2015