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Singapore’s Big Loser for the Week: Parkson Retail Asia Pte Ltd

Parkson Retail Asia Pte Ltd (SGX: O9E), which operates department stores across cities in Malaysia, Vietnam, Indonesia, and Myanmar, has sunk by 13% since last Friday to close at S$0.70 on Thursday. Comparatively, the Straits Times Index (SGX: ^STI) has slipped by just just 0.8%. This thus makes Parkson Retail a huge loser in the local market this week.

At the end of December, the retailer paid out a special dividend of S$0.04 per share for the first quarter of its fiscal year ending 30 June 2015 (FY2015). During the quarter (the three months ended 30 September 2014), Parkson Retail saw its revenue increase by 1.2% year-on-year to S$110 million while its net profit moved in the opposite direction. The increase in revenue was due to contributions from new stores and newly-renovated stores which were opened and re-opened, respectively, during FY2014.

Pre-tax profit for the quarter declined by 27.9% year-on-year to S$10.5 million due to losses incurred by the new stores during their gestation period. Due to the big slide in pre-tax profit, net profit slumped 33.1% year-on-year to S$6.9 million.

Mr. Toh Peng Koon, Chief Executive Officer of Parkson Retail, commented on his firm’s outlook. He said,

“Despite the macro environment displaying mixed signals of development, we remain focused on enhancing our fundamentals. With our strong balance sheet, we are able to ride out the gestation period of the new stores and overcome the current challenges experienced in Malaysia and Vietnam. At the same time, we are constantly prepared for opportunities to expand our footprint in the key regions of our operations. We remain committed to maximising shareholder returns.”

Parkson Retail is currently trading at 15 times its historical earnings and has a dividend yield of 3.6%.

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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 Sudhan P doesn’t own shares in any companies mentioned.