Parkson Retail Asia

Parkson Retail Asia (PRA): 1HFYJun13 results below, but outlook remains positive. Revenue at $236m, +4.6% yoy, on the back of positive same-store-sales growth (SSSG) in Msia (+4.2%) and Indonesia (+6.7%) and positive contributions from store expansion. Weaker consumer sentiment in Vietnam however was a negative headwind resulting in a -7.4% SSSG. Net profit however, fell 7.8% yoy due to seasonality factors, arising from a late start of the Chinese New Year and Tet which further delayed festive spending. While HSBC expects the negative pretax profit growth to weigh on stock price, the house expects 2HFY13 to be a lot stronger with double digit revenue and profit growth as the co maintains its full year SSSG guidance for Msia (7-9%) and Indonesia (9-10%), while Vietnam (1-2%) owing to a longer recovery. Notes the co is highly cash generative, and has the highest return on capital employed among its peers. Believes PRA does not deserve to trade at a discount to peers. Highlights potential upside from acquisitions, eg. in Thailand and the Philippines. HSBC keeps its Overweight rating with TP $1.78. CIMB also rates at Outperform with unchg TP $1.75. Recommends accumulating shares after profit taking settles down, likely in the $1.50-$1.60 area. CLSA downgrades from Buy to Outperform, but lifts TP to $1.95 from $1.69. Still likes the stock for its unique exposure to Asean and “frontier” consumers, eg. Myanmar where it will launch a 40k sf Parkson by 4Q.