Tuesday, February 28, 2012

Parkson- playing the growth of Asian domestic demand

Results Update

For QE31/12/2011, Parkson's net profit increased by 17% q-o-q or 13% y-o-y to RM106 million while turnover increased by 15% q-o-q or 20% y-o-y to RM911 million. The increased turnover on y-o-y basis came mainly from the Chinese operation while its Malaysia operation saw a slight increase in turnover. The Indonesian operation, which recorded its maiden turnover, brought up the rear.

In term of segmental results, the Chinese division suffered a drop of RM16 million which was more than offset by higher segmental results from the Malaysian operation- an increase of RM17 million- and a maiden profit contribution of RM4 million from the Indonesian operation.

Table: Parkson's last 8 quarterly result

Chart 1: Parkson's last 20 quarterly results


Parkson had expanded into two large markets in the past few quarters- Indonesia and Vietnam. These markets are expected to be the next area of growth for Parkson.


Parkson (closed at RM5.58 yesterday) is now trading at a PE of 16.3 times (based on the last 4 quarters' EPS of 34.13 sen. At this PE, Parkson is deemed fairly valued.

Technical Outlook

Parkson's uptrend seems to have come to a halt over the past 2 years. Part of the reason for this could be the slowdown in its turnover over the past few years. This is however being addressed with the expansion into Indonesia & Vietnam. Once the bottom-line starts to rise again, the stock could enter into a new upleg.

Chart 2: Parkson's monthly chart as at Feb 2, 2012 (source: Tradesignum)


Based on exciting prospect, satisfactory financial performance & reasonable valuation, Parkson is a good stock to ride the Asian consumer play.


cheer said...

Hi Alex,

How u see atlan with strong uptrend?

Alex Lu said...

Hi cheer

For the past 2 years, Atlan is moving within an expanding triangle. It may be on the way to test the upper boundary of that triangle at RM3.70.

I am not impressed with Atlan. The way it disposed its properties over the past two years seems highly unusual. Some of the properties sold were in very desirable location and they were quickly grabbed up by the big boys, including Mahsing.