Parkson eyes bigger earnings from China operations

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KUCHING: Parkson Holdings Bhd’s (Parkson) subsidiary, Serbadagang Holdings Sdn Bhd’s (Serbadagang) acquisition of 43.31 per cent interest in Qingdao No.1 Parkson Co Ltd, China, (Qingdao No.1 Parkson) will enable the company to tap a larger share of Qingdao Parkson’s earnings in the near future.

EARNINGS ACCELERATOR: One of Parkson’s retail outlets in China. Parkson’s acquisition of Qingdao No.1 Parkson Co Ltd, will enable the company to tap a larger share of Qingdao Parkson’s earnings in the near future.

EARNINGS ACCELERATOR: One of Parkson’s retail outlets in China. Parkson’s acquisition of Qingdao No.1 Parkson Co Ltd, will enable the company to tap a larger share of Qingdao Parkson’s earnings in the near future.

OSK Research Sdn Bhd (OSK Research) in a research report cited that Qingdao Parkson had been registering growth for the past three years, with its net profit increasing from RM2.3 million to RM12.9 million in financial year 2008.

Meanwhile, the research firm noted that the acquisition of Qingdao No.1 Parkson included three Qingdao retail outlets and one commercial piece of property valued at RMB500 million (RM250 million) was about 15 per cent discount to Qingdao No.1 Parkson’s Net Tangible Asset (NTA).

It observed that the acquisition would enable Parkson to inject them into its Hong Kong’s operations, Parkson Retail Group (PRG), which was in line with the group’s objective to inject all the currently excluded stores into the latter once they become profitable.

It also noted that Serbadagang had recently received the approval from a court in China for the proposed acquisition.

In the meantime, Qingdao Parkson is a 50:50 per cent joint venture (JV) between Parkson Venture, a wholly-owned subsidiary of Parkson and China Qingdao. It stated that the JV was for a 30-year period commencing Aug 26, 1994 to Aug 25, 2024.

Likewise, OSK Research viewed that the acquisition would increase Parkson’s shareholding from 52.6 per cent to 95.91 per cent.

Parkson expected the acquisition to be completed by the first quarter of 2010.

Therefore, the research firm remains optimistic on Parkson’s acquisition and upgrades its recommendation, pegging its shares price at RM7.11 per share.