Thursday, 19 January 2012

Parkson top gainer, strong growth opportunities seen

KUALA LUMPUR (Jan 19): PARKSON HOLDINGS BHD [] was the top gainer on Thursday morning as it was seen to be able to tap into the strong consumer growth opportunities in the region.

At 10.21am, the share price was up 18 sen to RM5.78 with 201,100 shares done.

The FBM KLCI rose 2.8 points to 1,520.18. Turnover was 570.49 million shares valued at RM272.30 million. There were 253 gainers, 194 losers and 270 stocks unchanged.

Affin Investment Bank Research said it continues to like Parkson for its attractive valuations. At the price level of RM5.60, it was trading at 13.7 times CY12 price-to-earnings, on par with its closest peer, Aeon (13.1 times) but slightly below sector average of 14.8 times.

Historically, however, Parkson had traded at a PE premium to Aeon, which it believed was justified given: 1) stronger three-year earnings CAGR of +17% (Aeon: +7%); 2) strong growth opportunities, particularly in Indonesia, Vietnam and Cambodia, and; 3) exposure to the regional consumer sector.

“We lifted our FY06/12-14 net earnings forecasts by +2-3% after raising our same store sales growth assumptions for Malaysia (from 6% to 8%) and Indonesia (from 5% to 8%). However, we lower our PE target for Parkson Retail Group (PRG) to 20 times (previously, 23 times) to take into account weaker market sentiment in China and Hong Kong – PRG is currently trading at 15.8 times CY12 PE.

“Consequently, our RNAV-derived target price is revised downwards to RM6.65 (previously, RM7.15). Notwithstanding that, we maintain our BUY rating,” it said.

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