Parkson Retail

Parkson Retail Asia: HSBC noted that the weak quarter was well anticipated, but it turned out better than expected. 1QFY14 net profit fell 11.4% y/y to $10.3m while revenue slipped 4.1% to $108.7m. This was due to a decline in commissions from concessionaire sales and direct sales revenue. Temporary closes also affected top line. In Malaysia same store sales growth (SSSG) was -0.1% (1QFY13: +5.7%) on contributing factors such as fuel price hike and tightening measures to curb house hold debt. Profit before tax (PBT) fell 9.2% to $11.6m Vietnam had a loss of $0.2m due to SSSG of -1.1% (1QFY13: -6.3%) compounded by cost pressure. The economy is also affected by slow growth PBT for Indonesia ops declined 13.3% due to significant pre-opening expenses on the new Bekasi Store, plus the weakening of IDR. Excluding pre-opening expenses, PBT was up 2.6%, with 3.9% SSSG The house highlights that cost control is exemplary with operating costs only increasing 2.4% y/y attributable to the abovementioned Bekasi store. HSBC notes as the holiday season comes and refurbished stores reopens, next few quarters should be relatively better. Indonesia seems to be the only bright spot as Malaysia and Vietnam’s consumer spending might not turn around so soon. HSBC highlights catalysts: 1) Malaysian recovery, 2) new Indonesian stores start making a contribution. HSBC maintains O/W with TP $1.60.