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

Prospects

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.

Valuation

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)

Conclusion

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