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Parkson Retail Asia Fails To Impress With Third Quarter Results

parkson logoParkson Retail Asia (SGX: O9E) is a department store operator in Southeast Asia with interests in Malaysia, Indonesia and Vietnam. The share has not been kind to investors over the past few years since its IPO in 2011. Falling off from its high of S$ 1.70 per share, the company closed on 8th May 2014 at S$ 0.925 per share, slightly below its IPO price of S$ 0.94 per share. The company announced its third quarter earnings on 8th May 2014.

Operating Result

Parkson Retail Asia ended the third quarter with revenue down 1.7% from last year. It recorded revenue of S$ 106.7million for the quarter. Its profit attributable to shareholders for the quarter is down a huge 22.6% to just S$ 7.6million. For the whole of nine months, the net profit to shareholders has drop 9.2% to S$ 31.4million.

The company is facing a competitive environment in Malaysia and Vietnam. The same store sales growth (SSSG) in Malaysia is almost flat, with just a 0.1% growth for the quarter. Vietnam has seen large number of new retail space launched in Hanoi and there might be signs of oversupply in the market. Its same store sales growth in Vietnam is -7.2% for the quarter. Indonesia is the only segment that is growing, producing a SSSG of 8.9% for the quarter. The company has entered the Myanmar market in May last year but the business is still small and insignificant.

Startup cost for new stores also affected the results for the quarter. The group has launched 5 new stores for the 9 months in this financial year. The management expects to have another weak forth quarter mainly due to the slowdown in tourism in Malaysia and the oversupply of retail space in Vietnam.

Balance Sheet is strong, with a no debt and a cash balance of S$ 164.4million. The net asset value per share is S$0.38 at the end of the quarter.

With its current share price, the company is trading at a Price to Book ratio of 2.4 times and an annualised Price to Earnings of 15 times.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.