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Results Note – Parkson (REDUCE, downgrade) - Throwing in our towel




Affin Hwang Investment Bank Bhd


25 Nov 2013





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Downgrading PHB to REDUCE with a lower RNAV-derived of RM3.38 We are downgrading Parkson Holdings (PHB) from ADD to REDUCE, as we remain cautious on its earnings outlook, particularly its China operation. In essence, we believe the stiff competition as well as shifting retail trend in China will continue to haunt the demand for PRG's products and hence bottomline. After incorporating a lower cash holdings (from RM280m to RM250m), as the group had utilize RM30m to: 1) pay the deposits for its Cambodia malls; and 2) share buybacks, into our RNAV estimate, and pegging both PRG and PRA valuations with a lower target PER of 16x and 17x respectively (from 18x), our RNAV-derived TP is now lowered from RM3.71 to RM3.38.

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