Stock Name: PARKSON
Company Name: PARKSON HOLDINGS BHD
Research House: OSK
Parkson Holdings Bhd
(Feb 23, RM5.43)
Maintain buy at RM5.46 with revised target price RM6.31 (from RM6.67): Parkson Holdings' (PHB) 1HFY11 results were in line with our forecast and consensus estimates of RM373.9 million and RM371.6 million respectively. Revenue and net profit in 1HFY11 rose 4.6% to RM1412.9 million and 17.2% to RM170 million year-on-year (y-o-y) respectively, attributed to the stronger growth in commissions from concessionaires of 7% to RM792.5 million while direct sales grew 2.5% y-o-y to RM558.0 million.
Apart from new openings, the stronger results were attributed to the impressive same-store sales (SSS) growth in China (+11.4%), Malaysia (+10%) and Vietnam (+23%), which were at least in line with management's same store SSS growth guidance of 11% to 12% for China, 5% to 6% for Malaysia and 15% to 20% for Vietnam. If not for the stronger ringgit, net profit would have surged by 25.4% to RM181.9 million. On a quarter-on-quarter (q-o-q) basis, its top and bottom line improved by 16.9% and 23.1% respectively, driven by the year-end festive seasons.
Despite the lower merchandise margin for its new stores in China and higher operating cost, earnings before interest, tax, depreciation and amortisation (Ebitda) margin improved one percentage point to 33.8% on higher other operating income and a better overall merchandise gross margin of 19.7% against 19.5% in 1HFY10. Commission rate was flat at 20.1% against 20.5% in 1HFY10 while direct sales margins expanded slightly to 16.2% from 15.9%.
Parkson has identified eight new locations in China for new stores in 2011. These outlets have a total floor space of 300,000 sq m, representing a 30% increase in total floor space in China. In Malaysia and Vietnam, Parkson will open KL Festival City in June 2011 and Landmark Tower Hanoi in 3Q11.
Despite the numbers being in line, our FY11/12 earnings forecasts have been trimmed by 1.6% to 3.3% to RM361.4 million and RM439.7 million respectively, as we have updated the total floor space for newer outlets and included higher operating costs. Our target price is cut to RM6.31 from RM6.67, based on a realisable net asset value of 24 times PER for its China operation, 14 times PER (12 times previously given the positive retail outlook and in line with the higher PER of Aeon) for its Malaysia operation, and 10 times PER for both Vietnam and the excluded stores. ' OSK Investment Research, Feb 23
This article appeared in The Edge Financial Daily, February 24, 2011.
Company Name: PARKSON HOLDINGS BHD
Research House: OSK
Parkson Holdings Bhd
(Feb 23, RM5.43)
Maintain buy at RM5.46 with revised target price RM6.31 (from RM6.67): Parkson Holdings' (PHB) 1HFY11 results were in line with our forecast and consensus estimates of RM373.9 million and RM371.6 million respectively. Revenue and net profit in 1HFY11 rose 4.6% to RM1412.9 million and 17.2% to RM170 million year-on-year (y-o-y) respectively, attributed to the stronger growth in commissions from concessionaires of 7% to RM792.5 million while direct sales grew 2.5% y-o-y to RM558.0 million.
Apart from new openings, the stronger results were attributed to the impressive same-store sales (SSS) growth in China (+11.4%), Malaysia (+10%) and Vietnam (+23%), which were at least in line with management's same store SSS growth guidance of 11% to 12% for China, 5% to 6% for Malaysia and 15% to 20% for Vietnam. If not for the stronger ringgit, net profit would have surged by 25.4% to RM181.9 million. On a quarter-on-quarter (q-o-q) basis, its top and bottom line improved by 16.9% and 23.1% respectively, driven by the year-end festive seasons.
Despite the lower merchandise margin for its new stores in China and higher operating cost, earnings before interest, tax, depreciation and amortisation (Ebitda) margin improved one percentage point to 33.8% on higher other operating income and a better overall merchandise gross margin of 19.7% against 19.5% in 1HFY10. Commission rate was flat at 20.1% against 20.5% in 1HFY10 while direct sales margins expanded slightly to 16.2% from 15.9%.
Parkson has identified eight new locations in China for new stores in 2011. These outlets have a total floor space of 300,000 sq m, representing a 30% increase in total floor space in China. In Malaysia and Vietnam, Parkson will open KL Festival City in June 2011 and Landmark Tower Hanoi in 3Q11.
Despite the numbers being in line, our FY11/12 earnings forecasts have been trimmed by 1.6% to 3.3% to RM361.4 million and RM439.7 million respectively, as we have updated the total floor space for newer outlets and included higher operating costs. Our target price is cut to RM6.31 from RM6.67, based on a realisable net asset value of 24 times PER for its China operation, 14 times PER (12 times previously given the positive retail outlook and in line with the higher PER of Aeon) for its Malaysia operation, and 10 times PER for both Vietnam and the excluded stores. ' OSK Investment Research, Feb 23
This article appeared in The Edge Financial Daily, February 24, 2011.
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