Parkson Retail Asia

Parkson Retail Asia: HSBC visited a no. of Parkson’s stores in Klang Valley, Msia, for recent channel checks and some of Parkson’s competitors, Aeon Dept Store and Isetan. Believes Parkson’s stores are clearly differentiated and dominant in the middle to upper income segment of Msia. The house reiterates its Overweight rating and TP $1.60. Notes value is there with the stock trading at 17.9x FYJun14e P/E against a sector avg of 25.4x. But highlights a lack of catalyst currently, as growth in Msia will be slower for the next 2-3 quarters than historically, especially after the govt lifted the price of subsidized fuel by ~11% in Sep. Nevertheless it believes fundamentally, Parkson’s is solid and the economic conditions will ultimately improve. If Parkson wanted, it could boost its share price performance by paying a special dividend from its excess cash on balance sheet or conducting a share buyback.