Stock Name: PARKSON
Company Name: PARKSON HOLDINGS BHD
Research House: RHB
Parkson Holdings Bhd
(May 26, RM5.79)
Maintain market perform but with higher fair value of RM6.10 (from RM5.90): Parkson's 9MFY11 core net profit of RM275.2 million (+10.2% year-on-year) was above our expectations but within consensus estimates, accounting for 85% of our and 79% of consensus full-year forecasts.
The key variance to our forecasts was the lower than expected minority interest portion of RM197.8 million, 69% of our full-year forecast. We have therefore adjusted our minority interest assumption downwards for FY11 to FY13.
Another variance was a stronger than expected same store sales (SSS) growth for 9MFY11 of'' 9% (against our forecast of 5%) in Malaysia, which we believe was a result of the stronger economic conditions compared with the previous corresponding period, coupled with successful promotional activities.
SSS growth for China and Vietnam of 12% and 22% was in line with our estimates of 11% and 20%.
Due to the stronger than expected SSS growth in Malaysia, we are increasing our SSS growth for FY11 to 9%, to be in line with the 9MFY11 results.
To remain conservative however, we are leaving our SSS growth assumption for FY12 and FY13 unchanged at 5% per year as guided by management previously.
Parkson will continue its aggressive store expansions of eight to 10 stores in China, and two stores each in Malaysia and Vietnam in the coming years, which is in line with our estimates.
Assuming its Centro deal goes through by July this year, we expect contribution from Indonesia to come onstream in FY12, although we believe it would only add 3% to 4% to Parkson's overall bottom line.
Nonetheless, we believe that Parkson's entry into Indonesia would further strengthen its position as a regional department store player.
Note that we have not imputed contribution from Indonesia given that the deal is still not completed yet.
Our FY11 to FY13 earnings forecasts are adjusted upwards by between 7.9% and 9.6% after: (i) adjusting our minority interests assumption downwards; and (ii) increasing Malaysia's SSS growth assumption to 9% for 6MFY11 (from 5% previously).
The risk is a contraction in consumer spending in China, Malaysia and Vietnam.
Our sum-of-parts-derived fair value has been increased to RM6.10 (from RM5.90 previously) after our earnings upgrade and after imputing Parkson's latest net cash position of RM1 billion. ' RHB Research Institute, May 26
This article appeared in The Edge Financial Daily, May 27, 2011.
Company Name: PARKSON HOLDINGS BHD
Research House: RHB
Parkson Holdings Bhd
(May 26, RM5.79)
Maintain market perform but with higher fair value of RM6.10 (from RM5.90): Parkson's 9MFY11 core net profit of RM275.2 million (+10.2% year-on-year) was above our expectations but within consensus estimates, accounting for 85% of our and 79% of consensus full-year forecasts.
The key variance to our forecasts was the lower than expected minority interest portion of RM197.8 million, 69% of our full-year forecast. We have therefore adjusted our minority interest assumption downwards for FY11 to FY13.
Another variance was a stronger than expected same store sales (SSS) growth for 9MFY11 of'' 9% (against our forecast of 5%) in Malaysia, which we believe was a result of the stronger economic conditions compared with the previous corresponding period, coupled with successful promotional activities.
SSS growth for China and Vietnam of 12% and 22% was in line with our estimates of 11% and 20%.
Due to the stronger than expected SSS growth in Malaysia, we are increasing our SSS growth for FY11 to 9%, to be in line with the 9MFY11 results.
To remain conservative however, we are leaving our SSS growth assumption for FY12 and FY13 unchanged at 5% per year as guided by management previously.
Parkson will continue its aggressive store expansions of eight to 10 stores in China, and two stores each in Malaysia and Vietnam in the coming years, which is in line with our estimates.
Assuming its Centro deal goes through by July this year, we expect contribution from Indonesia to come onstream in FY12, although we believe it would only add 3% to 4% to Parkson's overall bottom line.
Nonetheless, we believe that Parkson's entry into Indonesia would further strengthen its position as a regional department store player.
Note that we have not imputed contribution from Indonesia given that the deal is still not completed yet.
Our FY11 to FY13 earnings forecasts are adjusted upwards by between 7.9% and 9.6% after: (i) adjusting our minority interests assumption downwards; and (ii) increasing Malaysia's SSS growth assumption to 9% for 6MFY11 (from 5% previously).
The risk is a contraction in consumer spending in China, Malaysia and Vietnam.
Our sum-of-parts-derived fair value has been increased to RM6.10 (from RM5.90 previously) after our earnings upgrade and after imputing Parkson's latest net cash position of RM1 billion. ' RHB Research Institute, May 26
This article appeared in The Edge Financial Daily, May 27, 2011.
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