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All Information About Parkson Holdings Berhad ( Visin and Mission)

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All Information About Parkson Holdings Berhad ( Visin and Mission)
RETAILING

PARKSON HOLDINGS BHD

14 September 2012

(PKS MK, PKNS.KL)

Excellent play on China’s stimulus expectations

BUY

Company report

(Maintained)

Low Soo Fang low-soo-fang@ambankgroup.com Rationale for report: Company Update

+603 2036 2292
Price
Fair Value
52-week High/Low

RM4.58
RM6.30
RM5.90/RM4.30

Investment Highlights



We re-affirm our BUY recommendation on Parkson
Holdings Bhd (PHB), with a higher sum-of-parts fair value of RM6.30/share (vs. RM6.20/share previously) as we raised our average sales/GFA growth rates in anticipation of a recovery in China retail sales growth going into
CY2013.



We believe PHB is an excellent play on China’s stimulus expectations. Measures by the Chinese government to bolster growth to achieve its 2012’s target GDP growth of
7.5% will be a positive consumption boost. Such a move appears likely. As it is, China’s Aug PMI data of 47.8 (MoM:
-1.7ppts) is the lowest since Nov last year, and likely to prompt authorities for a more decisive action.



More importantly, we reckon the balance of risk is now leaning to the upside. Whilst modest, we see a sequential rise in SSSG for China ops, off a historical low of 2.9%
(1HCY2012). To put things into perspective, SSSG was
4.9% higher during the global financial crisis (June 2009).
This suggests SSSG could be approaching its trough, with downside risks now limited.



Meanwhile, its principal markets under 67.6%-owned
Parkson Retail Asia (PRA Sp Equity, Non-rated) are expected to deliver stable growth, led by the supportive macro environment in both Malaysia & Indonesia. This should provide some cushioning against a muted performance outlook in Vietnam. Malaysia & Indonesia account for 15%-18% of PHB’s EBIT, while China remains the group’s earnings backbone at ~80%.



Our FY13F-15F EPS are tweaked upwards by 3%-4%, underpinned by stronger operating profit growth from:- 1)
Expansion in GFA by a

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