Analyst Research Report Snapshot

Title:

Company Update – Parkson (ADD, maintain) - Dragged by PRG’s China operations

Price:

$46.00

Provider:

Affin Investment Bank

Date:

24 Nov 2013

Pages:

5

Type:

AcrobatPDF

Companies referenced:

PRKN.KL

Available for Immediate Download
Summary:

PRG’s 9M13 core net profit plunged -47% yoy Last week, Parkson Holdings’s (PHB) 51.5%-owned unit Parkson Retail Group (PRG) posted a disappointing set of 9MFY13 financial results. In tandem with the generally weak discretionary spending in China, same-store-sales (SSS) growth for PRG contracted -1.8%. Although revenue grew by a marginal +0.7% yoy to RMB3.8bn, PRG's 9MFY13 core net profit plunged by -47% yoy to RMB340m. We attribute this to: 1) the overall soft SSS growth which was offset by higher operating expenses (yoy: +13.5%); 2) stiffer-than-expected competition which had resulted in a -0.7%-point drop in merchandise margins to 17.9%; and 3) higher effective tax rate of 32% vs 9MFY12's 26.5%. Results were below both our and consensus expectations, accounting for only 51% and 53% of both our and street FY13 full year forecasts.

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