PublicIn­vest ‘ neu­tral’ on Park­son

> Re­search house main­tains call on stock, awaits clar­ity on re­tailer’s pro­posed dis­posal of China sub­sidiary

The Sun (Malaysia) - - SUNBIZ -

PE­TAL­ING JAYA: PublicIn­vest Re­search is keep­ing its “neu­tral” call on Park­son Hold­ings Bhd with an un­changed tar­get price of 72 sen, de­spite the group’s pro­posal to dis­pose of its en­tire in­ter­est in its China sub­sidiary, pend­ing fur­ther clar­ity on the trans­ac­tion and EGM for share­hold­ers’ ap­proval.

In a re­port yes­ter­day, PublicIn­vest an­a­lyst Nor Asi­lah Am­ran said prospects in the re­gion re­main chal­leng­ing, in view of weak spend­ing and con­sump­tion pat­tern cou­pled with stiff com­pe­ti­tion, which also comes from rapid de­vel­op­ment of e-com­merce plat­forms.

“China (the sub­sidiary), to re­cap, for FY16 re­ported an op­er­at­ing loss of RM90.7 mil­lion, pri­mar­ily due to higher costs from its new busi­ness ven­tures and new stores in this ramp-up pe­riod.

“Park­son is also step­ping up its ef­forts to keep rel­e­vant, hav­ing launched a new mo­bile shop­ping ap­pli­ca­tion, Park­son Plaza in June to lever­age on dig­i­tal plat­forms in en­hanc­ing cus­tomers’ shop­ping ex­pe­ri­ences,” she added.

On Tues­day, the group, which owns 54.67% of Park­son Re­tail Group (PRG), an­nounced the dis­posal of its 100% in­ter­est in Bei­jing Huadesh­eng Prop­erty Man­age­ment Co Ltd to Shen­zhen Qian­hai Tu­lan In­vest­ment Centre (LLP) and Shang­hai Changkun In­vest­ment Man­age­ment Co Ltd.

Bei­jing Huadesh­eng is in­volved in prop­erty de­vel­op­ment and prop­erty in­vest­ment.

Fol­low­ing the dis­posal, the group’s earn­ings is ex­pected to be higher by RM300 mil­lion or 28 sen per share, while its net as­sets on a pro­forma ba­sis, will be higher by RM300 mil­lion (29 sen per share) as at June 30, 2015.

Nor Asi­lah said PRG’s di­rec­tors saw the dis­posal as an op­por­tu­nity to un­lock the value of the dis­posal sub­sidiary at an at­trac­tive price, in light of the chal­leng­ing op­er­at­ing en­vi­ron­ment, not­ing the depart­ment store has been loss-mak­ing since open­ing in De­cem­ber 2010.

She said the dis­posal would also see the group cease any in­vest­ment re­sources to a loss-mak­ing op­er­a­tion, with the pro­ceeds to im­prove its fi­nan­cial po­si­tion.

Nor Asi­lah noted that the group would use the net pro­ceeds of ap­prox­i­mately RMB1.9 bil­lion to en­hance and ex­pand its fash­ion and food and bev­er­age brands, while ex­plor­ing new busi­ness in­vest­ment op­por­tu­ni­ties to ex­pand its rev­enue streams.

Work­ers col­lect­ing oil palm fruit at a plan­ta­tion in Malaysia.

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