PARKSON

PARKSON OVERVIEW


Parkson Holdings berhad is a Malaysia-based investment holding company. The Company, along with its subsidiaries, is principally engaged in operations of the parkson brand department stores. The businesses are located in the Malaysia, Hongkong and also Vietnam. The Company has a chain of 85 Parkson department stores, with 35 in Malaysia, 44 in China and 6 in Vietnam. In July2011, it acquired Puncak Pelita Sdn Bhd. In November 2011, the Company announced that Tianjin Parkson Shopping Mall Co. Ltd acquired the land of a shopping complex located at the northeast corner of Nanmenwai Street and Shenyi Street, Heping District, Tianjin City, the People's republic of China, which consists of a five storey building with a land area of approximately 13,424.6 square meters and total gross floor area of about 45.022.15 square meters.

Fundamental Analysis
MARKET CAP = 6234 MIL
SHARE OUTSTANDING 1093.69MIL
CURRENT SHARE PRICE = 5.53
ROE = 15%
ROI  = 17%
5 YEAR AVERAGE EPS GROWTH RATE = 20%
AVERAGE PE   = 15
QUICK RATIO = 1.20
CURRENT RATIO = 1.34
DEBT TO EQUITY RATIO = 88.99
CURRENT EV/EBITDA = 10
PREDICT EV/EBITDA (BASE ON 6.30 F SHARE PRICE) = 9.60
P/BOOK VALUE = 2.04
DIVIDEND YIELD = 3%
CASH PER SHARE = 2.5 SEN PER SHARE
LAST YEAR EPS AS AT AT 2011 = 0.32 SEN

Comment on fundamental view
Fundamentally, Parkson did incur a vast amount of debt but in this case as an investor i wouldn't be worry as it is foreseen that the mounting of debts are used for expansion. As you can see during the preceding year, Parkson Holdings plans to expand its retail network in Indonesia from six outlets presently to 20 to 24 outlets by 2015. Likewise, Parkson Holdings cash per share increases by 23% to an amount of 2.7 billion which is 2.5 per share. With cash rich hoarding in Parkson balance sheet, i wouldn't be worry if any default payment happens on Parkson.

Intrinsic value for 5 years
Assuming that EPS growth rate for 5 years is 40% (Adjusted higher than average as assuming their expansion will take effect on their earnings)
EPS for 5th year = 0.47 per share
Average PE = 16
Forecast share price = RM7.52
Discounted value base of 4% = 0.822
Parkson Intrinsic Value = RM6.20 per share 

Comment :
Parkson Holdings has an impressive growth momentum. The downside risk will be slowdown in China's and Malaysia's consumer discretionary spending. However, i presume that estimated of 7 to 9 more stores to be open and this will continue to aid their earnings growth. Most impressively, Indonesians operations are beginning to rival the Vietnamese operations despite being relatively new. Although their dividend may not look appealing to certain investors, but what i would recommend is that it is more on a defensive play. As global ambiguity are circulating around the globe, i would standstill on investing more on defensive play. Thus i will remain Buy call at 5.50.

Technical view 
Share price is trading around 100 MA. 100 MA is crossing above 20 MA. I would advice investors to accumulate at a range of 5.40 to 5.55. Its more of a time to start accumulating this share. RSI remain around 50. Historically, when it slide slightly below 50, it will bounce back. Thus, i strongly recommend investors to start accumulating. For your info, please buy at your own risk. Happy investing!!!