Parkson Retail Asia

Parkson Retail Asia: 3QFY14 net profit fell 22.6% to $7.6m while revenue was shaved by 1.7% to $106.7m. Uninspiring revenue was due to flattish Malaysia SSSG as consumer sentiment remained weak on inflationary pressures. Vietnam had a -7.2% SSSG as discretionary retail spending remained weak in Vietnam despite signs of economic stability. Indonesia operations continued to record strong SSSG at 8.9%, with Bali store benefitting the most on increased tourist arrivals, driven by weak currency and improved flight connectivity. Going forward, Malaysia prospects is expected to be subdued on anticipated lower Chinese tourist arrivals due to MH370 incident, and continued weakness in the stores in Hanoi. Local currency weakness also remains a risk. There was a special dividend surprise of 3¢ and management remains committed to a payout ratio of 40-50%. StanChart estimates total payout to be 5.40¢, implying 5.8% yield in FY14. StanChart maintains O/PF with TP $1.28