KUCHING: Analysts are optimistic on Parkson Holdings Bhd’s (Parkson) new food and beverage (F&B) endeavor in China despite it being an unsurprising move.
In an announcement on Bursa Malaysia, Parkson, through 52.71 per cent-owned subsidiary Parkson Retail Group Limited’s wholly-owned subsidiary Grand Parkson Retail Group Limited, has entered into a joint venture agreement with AUM Hospitality Sdn Bhd (AUMH) to establish a joint venture company in the equity participation of 91 per cent and nine per cent respectively, for the purposes of developing its F&B business in China.
The research arm of TA Securities Holdings Bhd (TA Research) noted that AUMH has an existing partnership with Parkson Corporation Sdn Bhd and as such, the venture into China is not unexpected.
“While AUMH can tap on the Parkson retail group’s overseas presence and established network in China, the latter’s venture into the F&B business is in line with the retail group’s strategy to transform to a lifestyle concept retail business,” it said.
TA Research believes the group’s venture into the F&B sector will provide synergies to existing retail business and will provide new business and income stream to help cushion the slowdown in retail sales.
While the research arm is optimistic on the group’s efforts to strengthen its presence in the F&B business, it makes no changes to its earnings estimates at this juncture due to the lack of information provided on this new venture.
With that, TA Research maintained ‘sell’ on Parkson and its target price at RM2.72 per share which translates into an implied financial year 2015 (FY15) price-earnings (PE) of 22.8-fold.