PARKSON and the lions....

This used to be one of my favourite stock few years ago including all the other lion's companies
such as lion div, lion industry, lion corp,lionfib...you name it. With the help of a blogger friend, I even drew up a diagram showing how all the companies interlinked with each other and had a great discussion with some good friends and earned some good money. Now, I totally lost track of the lions, have to restudy back but where is my old notes and old friends? please help!

Positive Outlook for FY10 CONSUMER
· On track to meeting FY10 SSSG guidance
Parkson Holdings (PH) is expected to meet its FY10 SSSG guidance of
10-11% in China, 3-4% in Malaysia and 25-26% in Vietnam with little
difficulty. Consumer demand and spending has been supported by the
positive economic growth momentum in FY10. Malaysia is likely to
outperform forecast given the strong 11.3% SSSG registered in 1HFY10.

· Expanding store network
The group continues to extend its retail network by opening stores in new
locations, injecting minority interest stores and M&A activities.
Management continues to target an annual 15% increase in retail area
with 7-8 new store launches in the pipeline for CY10, of which 5 are in
China (3 of which have already been opened), 1 in Malaysia and 1-2 in
Vietnam. PH is also venturing into Cambodia, with its first store in the
country due to open its doors in 2HCY12.

· Alternative proxy to China’s retail growth
PH has a strong balance sheet with net cash of RM316.5m (at end-June
2010) that will enable it to fund its expansion capex. PH continues to
present a cheaper option for exposure to China’s retail market (FY11 P/E
of 17.3x compared to Parkson Retail Group’s 25.3x) and provides steady
earnings growth driven by a proven business model and continual
improvement in operating efficiency.

· Estimates unchanged
We are confident that our FY11 net profit growth forecast of 27% and
FY12 estimate of 25% will be met. Our assumptions of 7 new stores and
SSSG of 10% in FY11 are conservative and within Management
guidance.

· RM6.70 sum-of-parts target price
Reiterate our RM6.70 target price based on a sum-of-parts valuation
(utilising FY11 P/Es of 20x for China, 11x for Malaysia and 10x for
Vietnam) with a 20% holding company discount. Further, foreign
shareholding in PH stood at 22.4% (at September 2010), significantly
lower than the 30.0% peak in 2008, which would indicate a potential
further upside to share price. full report get it free from ECMlibra
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