#Hot Stock* Parkson rises 2.4% despite weak 2Q results of retail arm

KUALA LUMPUR (Feb 8): Parkson Holdings Bhd shares rose in early trades to be the fourth top gainer, despite announcing lower-than-expected quarterly results from its Singapore-listed retail arm – Parkson Retail Asia (PRA) Ltd.

For its second quarter to end-September 2012, PRA recorded reported a 2.2% year-on-year increment and a cumulative 4.6% y-o-y increment in revenue to SG$122.2 million and SG$23 million respectively.

The slightly weaker financial performance was attributed to continued weakness in its Vietnamese operations; and later timing of the Chinese New Year and Vietnamese New Year (Tet) in FY13 as compared to FY12.

“The commencement of the Chinese New Year and Tet 18 days later in FY13 as compared to FY12 will push festive-related shopping into 3QFY13 from 2QFY13. The shift in the lunar calendar was a drag on same store sales (SSS) growth in 2QFY13 in Malaysia and Vietnam,” said RHB research analyst Lee Wee Sieng.

At 11.08 am, Parkson’s shares were trading at RM4.78, up 11 sen or 2.4% with 145,600 shares done. It hit a high of RM4.80 earlier, and was the fourth top gainer across the exchange.

PRA’s Indonesia and Malaysia operations reported 2Q13 profit before tax of SG$4 million (+15.4% y-o-y) and SG$32.4 million (-2.9% y-o-y) respectively.

Vietnam operations recorded 2Q13 profit before tax of SG$2.1 million (-52.5% yoy) with same store sales declining 7.4% y-o-y due to economic slowdown.

The negative growth in Vietnam was the result of contractionary policies implemented by the Vietnamese government to manage inflation and reduce its trade deficit

“PRA’s Vietnam operations were also hit by operating losses at its new Landmark 72, Hanoi store. Manufacturers have been reducing their stockpiles indicating a cautious sentiment,” said Kelly Tan, an analyst from MIDF Research.

PRA plans to open seven new stores in FY13 with two in Malaysia, two in Vietnam, two in Indonesia and one in Myanmar, which will increase its total operating gross floor area by 11.4% to 702,000 square metres by end- FY13. PRA also plans to open another 8 stores in FY14.

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