For QE31/3/2015, Parkson's net profit dropped by 97% q-o-q or 95% y-o-y to RM3 million while revenue inched higher by 7% q-o-q or 9% y-o-y to RM1.05 billion. Revenue & operating profit increased q-o-q due to CNY & higher consumer spending ahead of the implementation of GST in Malaysia. PBT dropped due to one-off provision for arbitral award in respect of disputes arising from the Beijing Metro City Shopping Plaza's tenancy agreement (mentioned in an earlier post).
Table 1: Parkson's last 8 quarterly results
Chart 1: Parkson's last 33 quarterly results
Valuation
Parkson (closed at RM1.67 as at 10.00am) is now trading at a PER of 11 times (based on last 4 quarters' EPS of 15 sen). If the exceptional gain from the sale of the disposal of KL Festival City Mall amounting to RM109 million and the impairment loss on goodwill amounting to RM44 million booked into the accounts in QE31/12/2014, Parkson's last 4 quarters' EPS would be lower to 10 sen. This would translate to a PER of 17 ti mes. At this PER, Parkson is deemed fully valued.
Technical Outlook
Parkson has broken below the gradual uptrend line, SS at RM2.00. The "saucer bottom" line, AB should provide some support to the stock at RM1.50-1.60. On extreme weakness, overshooting is possible as seen in 2003.
Chart 2: Parkson's weekly chart as at Jun 22, 2015 (Source: ShareInvestor.com)
Conclusion
Despite poorer financial performance, full valuation & bearish technical outlook, Parkson is worth tracking as the share price has dropped substantially. The contrarian investors may consider this stock for long-term investment at the present price while those who bought earlier, should hold onto their investment.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Parkson.
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