2 quarters of below expectation results, mainly due to vietnam. (I visited their mall at VIetnam Ho CHi Min, it is not crowded, but it is well decorated, and staff well trained, speak good English)
The numbers are good, net cash position (Recent IPO), founders owned majority of stake. While Vietnam flounders, Indonesia is doing well, and they are expanding there. Numbers are also affected by closure of 3 stores for renovation in Malaysia.
OCF and FCF are positive.
Aim to provide 40% of profits as dividends, althought not a policy, but should be continued since founders owned big chunk of company.
Not actually cheap now, with forward PE of 15 (assume Q4 is as bad as Q3, unlikely), is market overlooking the growth prospect of the company?
Since MHA370 issue will blow over with the Chinese sooner or later, the expansion plans are in place till 2015.
(Just a very preliminary look, not vested )
life goes in cycles, predictable yet uncontrollable; just like the markets, but markets give you a second chance
I found it rather puzzling in a few areas. As I mentioned, the stock price is in a free fall, especially when the recent Q3 fail to inspire.
But Vietnam is stabilizing for the past few quarters, Sri-Lanka is doing well, the 3 temporary closures of Malaysia Stores has reopened. Indonesia have 2 stores that are newly opened, with more in the pipeline. Has market went from over optimistic to pessimistic? Also, the operating numbers are further aggravated by currency weaknesses in Malaysia and Indonesia etc.
I took a look at China Baihui which is also listed in SGX, the numbers are world apart, there isn’t even stability of profits, I do not want to go into valuation. Also, Parkson is a more established brand.
Then I look at business, the parent company and key personals hold the majority of stake in Parkson Asia Retail, they did not pay themselves options, remmuration seem fair.
From a negligible dividend of 1%, yield has become a more acceptable 3% with the fall in price.They aim to declare 40-50% of profits as dividends, although there is no fix dividend policy. But given the parent company hold the bulk of the shares, it is very unlikely that do not want dividends to flow back. In fact, they gave a special 3 cents dividend in Q3, and according to CIMB research is open to the idea of 100% payout in current year.
Another reason why the company is not doing well, could be its parents company is facing headwinds too.
See:Moody’s changes Parkson Retail Group (PArkson retail sister or parent, whatever you call it)’s outlook to negative
But Parkson is a net cash company with 24 cents per shares, assume the same poor Q3 results for Q4, highly unlikely, PE for 2014 will be 15. Low for a cash generating, asset-light business (Main revenue from concessionary sales) with a strong brand name. If you take away the cash, PE is around 10.
Market is assuming Parkson will be a negative growth company in the future. A flat growth will make it fairly valued. A negative growth over-valued.
Looking at factors that could have affect sales, one of it could be the MH370 incident, affecting Chinese tourists. I felt that is one off incident.
I think Indonesia and Sri Lanka could offset Vietnam, and Malaysia could managed flat growth in the short term, and in the longer term, the consumer story has not changed.
(Vested)
life goes in cycles, predictable yet uncontrollable; just like the markets, but markets give you a second chance
(18-06-2014, 04:55 PM)Greenrookie Wrote: I found it rather puzzling in a few areas. As I mentioned, the stock price is in a free fall, especially when the recent Q3 fail to inspire.
But Vietnam is stabilizing for the past few quarters, Sri-Lanka is doing well, the 3 temporary closures of Malaysia Stores has reopened. Indonesia have 2 stores that are newly opened, with more in the pipeline. Has market went from over optimistic to pessimistic? Also, the operating numbers are further aggravated by currency weaknesses in Malaysia and Indonesia etc.
I took a look at China Baihui which is also listed in SGX, the numbers are world apart, there isn’t even stability of profits, I do not want to go into valuation. Also, Parkson is a more established brand.
Then I look at business, the parent company and key personals hold the majority of stake in Parkson Asia Retail, they did not pay themselves options, remmuration seem fair.
From a negligible dividend of 1%, yield has become a more acceptable 3% with the fall in price.They aim to declare 40-50% of profits as dividends, although there is no fix dividend policy. But given the parent company hold the bulk of the shares, it is very unlikely that do not want dividends to flow back. In fact, they gave a special 3 cents dividend in Q3, and according to CIMB research is open to the idea of 100% payout in current year.
Another reason why the company is not doing well, could be its parents company is facing headwinds too.
See:Moody’s changes Parkson Retail Group (PArkson retail sister or parent, whatever you call it)’s outlook to negative
But Parkson is a net cash company with 24 cents per shares, assume the same poor Q3 results for Q4, highly unlikely, PE for 2014 will be 15. Low for a cash generating, asset-light business (Main revenue from concessionary sales) with a strong brand name. If you take away the cash, PE is around 10.
Market is assuming Parkson will be a negative growth company in the future. A flat growth will make it fairly valued. A negative growth over-valued.
Looking at factors that could have affect sales, one of it could be the MH370 incident, affecting Chinese tourists. I felt that is one off incident.
I think Indonesia and Sri Lanka could offset Vietnam, and Malaysia could managed flat growth in the short term, and in the longer term, the consumer story has not changed.
(Vested)
I don't think taking away the whole chunk of cash presents a reasonable view of its PE multiple. IMO a significant amount of that cash will need to stay on book to finance its large amt of working capital.
Btw, at least for Parkson in JB, its... really bad. just bad. (JB only)
this counter is continuing its fall. wat would be a safe and fair entry price?
my guess is anywhere bet 60-75c since pe wld be near 10 & yield wld be 4-5% which most prob canbe maintained.
The research on these kind of companies is actually not so difficult Just ask your female friends if they would shop there
Thats said you would give a rough discount for a more comfy MOS and look for catalysts.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
There is no foolproof way to ensure retail sales will remain consistent. A successful store depends on factors like deeper service engagement between customers and staffs, great atmospherics, excellent in-store promotion, continuous loyalty card awareness, wide merchandise mix and appealing layout. Parkson, in my sample store visits, did not perform to what I thought it may be, thinking that the Chinese New Year period may drum up something special. Honestly, I am disappointed.
On the contrary, it does not mean I am not sticking with them. I believe in the business fundamentals of Parkson, for instance their low debt level and concessionaire sales business model. Just that, I dress up as a mystery shopper, providing a real life perspective from consumer standpoint. It may not be 100% accurate for sure but can be used as a guideline for Parkson to innovate and readily adapt to fast moving consumer trends. Hopefully, Parkson will take concise plans to strengthen long standing relationships with current customers while aggressively capture new customers (middle income groups) through their ongoing Parkson Elite Card membership program.
PUBLISHED AUGUST 22, 2014
Parkson Retail's Q4 earnings down 36%
Fall in same-store sales in Vietnam, adverse currency effects cited
BYNISHA RAMCHANDANI
nishar@sph.com.sg @Nisha_BT
DEPARTMENT store operator Parkson Retail Asia reported a near 36 per cent year-on-year drop in net profit to S$3.17 million for its financial fourth quarter ended June 30. This was due to negative same store sales growth (SSSG) in Vietnam, initial losses from new stores and adverse currency translation effects.
Revenue slid 4 per cent to S$99.18 million due to negative SSSG in Malaysia and Vietnam as well as the weaker Indonesian rupiah. Earnings per share for the period worked out to 0.47 Singapore cent, down from 0.73 a year earlier.
During the quarter under review, total expenses fell nearly 2 per cent to S$100.46 million, while total gross sales proceeds were S$246.05 million, down 2.2 per cent.
Share of losses of an associate was S$15,000 versus a share of profits of S$35,000 for the corresponding quarter a year ago.
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Just ask your female friends if they would shop there 