Yesterday, Parkson announced that its indirect wholly-owned subsidiary, Parkson Retail Asia Pte Ltd (“Parkson Asia”) and Centro Retail Pte Ltd (a wholly-owned subsidiary of Parkson Asia) proposed to acquire100% shareholding of PT Tozy Sentosa (“TS”), a subsidiary of PT Tozy Bintang Sentosa (“TBS”) at a total consideration of USD12,799,249. This is pursuant to a conditional joint-venture agreement with PT Mitra Samaya and Parkson Asia for the purposes of combining the Malaysian and Vietnamese retail business of Parkson with the Indonesian retail business of TBS. For more, go here.
Three days earlier, Parkson announced that it had completed the acquisition of a property located in Hai Phong, Vietnam for a cash consideration of USD24.15 million by Parkson Haiphong Co Ltd ("Parkson Haiphong"), a wholly-owned subsidiary of the Company, from Thuy Duong Investment Joint Stock Company of a property located in Hai Phong. For more, go here.
These two announcements signify Parkson's ambition to grow its departmental store operation aggressively in Vietnam & Indonesia.
Recent Financial Results
Parkson's net profit increased by 12% q-o-q or 26% y-o-y to Rm105 million for QE31/3/2011. Its turnover increased by 6% q-o-q as well as y-o-y to RM801 million.
Table: Parkson's past 10 quarterly results
Chart 1: Parkson's last 17 quarterly results
Valuation
Parkson (closed at RM5.96 today) is now trading at a PE of 19 times (based on last 4 quarters' EPS of 31.05 sen). At this multiple, Parkson is deemed overvalued unless it can show strong growth in the next financial year.
Technical Outlook
Parkson has been consolidating within a triangle for the past 18 months. If the share price can break above the RM6.00, the stock may continue with its prior uptrend. Thereafter, its resistance is at the clustered band of RM6.60-6.80 & then at RM7.80-8.00.
Chart 2: Parkson's weekly chart as at June 9, 2011 (Source: Quickcharts)
Conclusion
The recent corporate announcements may generate some excitement for Parkson. We will have to wait & see whether this would lead to a re-rating for the stock. The first sign of that would be an upside breakout of the resistance of RM6.00. However, it must be noted that Parkson is currently trading at a high PE of 19 times.
Alex,
ReplyDeleteWhat's your view on SBCcorp, its NTA is very high > RM2...
regards
hi alex,
ReplyDeletecompare parkson vs aeon, i notice aeon continue to go up. which one would you prefer for long term investment?
thanks
maxwealth88
Good morning,Alex.
ReplyDeleteCould you please enlighten us about MALTON-LR.Is the subscriber entitled to the bonus share?What is the entitlement like if one is to purchase the form to subscribe?Thnaks in advance.
Hi hkloon
ReplyDeleteI am not familiar with SBCcorp. It strikes me as a very small developer or contractor. It could be sitting on a piece of valuable real estate which analysts have just 'discovered'. Otherwise, its recent rally has all the trappings of a flash in the pan.
The recent rally was so strong that the stock managed to break above its long-term downtrend, which started in 1993. The immediate resistance is at RM1.00 while the immediate support is at RM0.85-0.90. If it can break above the the recent high of RM1.20, SBC could be entering into a medium-term uptrend. On the other hand, if it breaks below the RM0.85 level, it could fall back into the congested area with multiple support at RM0.50-0.70.
Hi MaxWealth88
ReplyDeleteBoth Parkson & Aeon are growth stocks. However, Parkson has regional exposure while Aeon is based solely in Malaysia. Because of its investment in Parkson Group HK which is exposed to China, Parkson has commanded a higher PE multiple. Of late, the weakness in the Chinese economy has rubbed off on Parkson & the share price has underperformed. Aeon did not suffer a similar problem.
If you annualized the EPS for QE31/3/2011 & compared these with the current share price, Parkson (at RM5.96 & EPS of 38.72 sen) would have a PE of 15.4 times. Aeon (at RM6.79 & EPS of 53.12 sen) would have a PE of 12.8 times. You may adjust a bit for the higher sales from the CNY period (captured in QE31/3/2011) but this may not matter if you are only concerned with comparing these two departmental stores. From the above, it seems that Aeon is a cheaper stock than Parkson.
Hi newbie
ReplyDeleteMALTON has gone ex for a Rights Issue of 2 RCSLS of RM1.00 each [c/w 2 free warrant & 1 free share] for every 5 MALTON owned on ex-date. If you subscribed for the RCSLS, you would get the free warrant & share. If you don't, you get nothing.
The RCSLS is convertible to share on 1-to-1 basis. Since you are paying RM1.00 for each RCSLS, you are sure to be at a loss but the issuer sweetened the deal by giving you 2 warrant & 1 share free. Would that be sufficient to make up for the loss. The bonus share is worth 50-60 sen. The warrant is worth 10-12 sen (assuming a 20% premium & ignoring the negative intrinsic value as the exercise price is at RM1.00). If you used the lower numbers, 2 warrants plus 1 share are worth 70 sen. If you were to use the higher numbers, they are worth 84 sen. Your RCSLS is probably worth 50-60 sen- which will give you a loss of about RM0.80-1.00 for 2 RCSLS. Some may opined that the RCSLS should attract a higher value, due to the high coupon rate of 6%. I doubt it would be worth more than 60 sen, if the share is trading at 50-60 sen. (Currently, it is trading at RM0.52). As such, the exercise has a high odd against a profitable outcome for someone subscribing for the RCSLS, ranging from a small profit of 4 sen to a sizable loss of 30 sen for every 2 RCSLS subscribed. It is better to buy the RCSLS or the warrant after the whole exercise has been completed.
Hi Alex,
ReplyDeleteWhat is your opinon on mutiara (5043) & epmb(7773)?
regards,
sook yin
Hi SunShine
ReplyDeleteI just read about Mutiara in the Edge over the weekend. It looks like a very promising company. It is in an uptrend line, with support at RM1.10. Its immediate resistance is the horizontal line at RM1.50 & then at RM2.00. Alternatively, you can look at its holding company, ATIS which owns 60% of Mutiara. The share price of ATIS has not run up very much. It is still in a long-term downtrend line, with resistance at RM1.25 while the medium-term uptrend line support is at RM1.00. Based on annualized EPS of 22 sen & closing price of RM1.14, ATIS is trading at a PE of 5.2 times. Mutiara is trading at a PE of 15.2 times (based on annualized EPS of 9 sen & closing price of RM1.37). [Note: Mutiara adopted the Completion method of accounting for property development which leads to fluctuation in top-line & bottom-line numbers. For smoother numbers, the company also furnished the Percentage of Completion numbers for both top-line & bottom-line. To arrive at the annualized number, the correct method is the Percentage of Completion method, which gives a EPS for QE31/3/2011 of 9.2 sen.]
On EPMB, we can see that the stock broke above its long-term downtrend line at RM0.60 in April. Its immediate support is at RM0.70-0.80 while its immediate resistance is at RM1.00 & then at RM1.20-1.30. EPMB achieved a EPS of 5.3 sen for QE31/3/2011. This would give the stock a PE of 4.7 times. Auto parts manufacturers trade at PE of 4-7 times depending on market cap. I think for EPMB, the fair PE multiple si about 6 times.