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Results Note – Parkson (ADD, maintain) - Below expectations but was well flagged




Affin Hwang Investment Bank Bhd


27 Aug 2013





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FY06/13 core earnings plunged -36% yoy to RM240.4m Parkson Holding’s (PHB) FY06/13 revenue grew marginally by +1.6% yoy to RM3.5bn, mainly due to the weaker-than-expected same-store-sales growth (SSSG) in both its Malaysia (+4.5%) and Indonesia (+5.6%) operations. (PHB’s China and Vietnam operations registered a -1% yoy contraction in SSS) The marginal revenue growth was offset by a sharp increase (+11.7% yoy to RM2.9bn) in operating cost, mainly driven by higher rental and staff expenses as a result of new stores expansion. (Note that PHB has in FY06/13 opened 4 new stores in China, one each in Malaysia, Indonesia and Vietnam). Hence, PHB’s EBIT margin slid -7.6%-points to 16.5%. Coupled with a higher effective tax rate of 30% vis-a-vis FY06/12’s 24.6%, PHB’s core net profit plunged -36% yoy to RM240.4m Results were below both our and street estimates, accounting for 91% and 84% of our respective full year forecasts.

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