RETAILING
PARKSON HOLDINGS (PKS MK, PKNS.KL) 21 March 2013
China a dampener in the near term
Company report HOLDTan Ee Zhio
+603 2036 2304
(Re-initiation)
Rationale for report: Re-initiation
Price RM4.64
Fair Value RM4.43
52-week High/Low RM5.50/RM4.30
Key Changes
Fair value Re-initiation
EPS Re-initiation
YE to Jun FY12 FY13F FY14F FY15F
Revenue (RMmil) 3,447.5 3,592.2 4,333.3 4,975.0
Core net profit (RMmil) 379.2 266.4 332.3 366.2
EPS (Sen) 34.8 24.5 30.5 33.7
EPS growth (%) 7.8 (4.2) 24.7 10.2
Consensus EPS (Sen) - 31.7 35.7 43.7
DPS (Sen) 16.0 12.0 15.0 16.0
PE (x) 13.3 19.0 15.2 13.8
EV/EBITDA (x) 4.7 5.0 3.9 3.3
Div yield (%) 3.4 2.6 3.2 3.4
ROE (%) 15.5 9.7 11.3 11.7
Net Gearing (%) Net cash Net cash Net cash Net cash
Stock and Financial Data
Shares Outstanding (million) 1,088.2
Market Cap (RMmil) 5,049.3
Book value (RM/share) 2.46
P/BV (x) 1.9
ROE (%) 15.5
Net Gearing (%) Net cash
Major Shareholders Narajaya Sdn Bhd (27.7%)
Tan Sri Cheng Heng Jem (20.2%)
Free Float (%) 12.3
Avg Daily Value (RMmil) 5.4
Price performance 3mth 6mth 12mth
Absolute (%) 2.7 (0.6) (17.3)
Relative (%) 1.0 (0.1) (21.3)
601
896
1,190
1,485
1,779
2.00
3.50
5.00
6.50
8.00
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Index Points
(RM)
Parkson FBM KLCI
PP 12247/06/2013 (032380)
Investment Highlights
• We are re-initiating coverage on Parkson Holdings Bhd (PHB), with a
HOLD at our fair value of RM4.43/share, based on a sum-of-parts
valuation for FY14F.
• Over the past year, PHB has rapidly expanded into China and Southeast
Asia via its respective 52%-owned and 68%-owned listed-subsidiaries,
Parkson Retail Group (PRG) and Parkson Retail Asia (PRA). PRA has
further expanded into Southeast Asia’s least developed markets –
Vietnam, Sri Lanka, Myanmar and Cambodia – following its foray into
Indonesia in 2011.
• On the revenue front, PHB is driven by China (66%), followed by Malaysia
(26%) and Indonesia (4%). China and Vietnam have been adversely
impacted by slower economic growth, resulting in weak consumer
spend.
• China’s SSSG has hit historical lows, with contractions of 1% and 2% in
1QFY13 and 1HFY13, respectively. There, we believe, were largely
attributed to intensification of competition among China-based retailers
(including Golden Eagle and Intime). There appears to be a footfall shift
towards more appealing malls amid their proliferation in numbers.
• Despite efforts to improve merchandising mix and establishment of an e-
commerce portal to circumvent the slowdown in SSSG, the impact of
these efforts is too early to gauge. Parkson undergoes facelifts once
every 4-5 years in order to maintain footfall momentum.
• All in, we opine management’s guidance of a mid-single digit SSSG in
FY13 may not be achievable. We are mainly uncertain about China’s
turnaround in SSSG, given that the key issue stems from a more
competitive landscape. We believe China’s 3Q SSSG growth would
remain flat at best, and any recovery will be gradual. Expansion will be at
a slow pace, at 5 new stores per annum.
• PRA will continue to expand its network in Indonesia based on a dual-
branding strategy (Parkson and Centro). The recent acquisition of Ordel
is deemed as a strategic platform for PRA to further expand into the
larger Indian sub-continent. Underpinned by stable recurring income,
PHB aims at a higher ratio of self-owned properties, moving forward.
• For FY13F, we project a healthy SSSG at 5% for Malaysia and Indonesia,
riding on stable consumer spending. This should cushion a muted
outlook in China and Vietnam given the near-term cyclical SSSG that is in
negative territory.
• FY13F-FY15F growth will be driven by an enlarged network of outlets –
China (FY13F: +8 and FY14F: +5) and Southeast Asia (FY13F: +7 and
FY14F: +8), coupled with the foray into Myanmar and Cambodia. Our
annual new store assumption is at two for each market.
• On a more positive note, the stock is a great play in the Asian consumer
sector. Balance sheet is healthy, with a strong cash pile of RM1.5bil as at
end-1HFY13.
• It is trading at 15x FY14F PE, on par with its 5-year historical mean and at
a 33% discount to local peer AEON Co (M) Bhd’s (AEON Mk Equity, Non-
rated) 20x.
Parkson Holdings 21 March 2013
AmResearch Sdn Bhd 2
RE-INITIATE WITH HOLD; FAIR VALUE:
RM4.43/SHARE
We are re-initiating coverage Parkson Holdings Bhd
(PHB), with a HOLD at our fair value of RM4.43/share
based on a sum-of-parts valuation for FY14F.
For FY13F, we project a healthy SSSG at 6% for Malaysia
and Indonesia, riding on stable consumer spending. This
should cushion a muted outlook in China and Vietnam,
given the near-term cyclical SSSG that is in negative
territory.
FY13F-FY15F growth will be driven by an enlarged
network of outlets – China (FY13F: +8 and FY14F: +5) and
Southeast Asia (FY13F: +7 and FY14F: +8), coupled with
the foray into Myanmar and Cambodia. Our annual new
store assumption is at two for each market.
It is trading at 15x PE FY14F, on par with to its 5-year
historical mean and at a 33% discount to local peer AEON
Co (M) Bhd’s (AEON Mk Equity, Non-rated) 20x.
PARKSON OCCUPIES 2.5MIL SQM OF GFA IN
CHINA AND SOUTH EAST ASIA
� Parkson is mushrooming everywhere!
Over the past one year, PHB has been expanding rapidly
in China and Southeast Asia, via its respective 52%-owned
and 68%-owned listed-subsidiaries, Parkson Retail Group
(PRG) and Parkson Retail Asia (PRA). See Table 2.
Since its foray into Indonesia (via Centro & Kem Chick) in
June 2011, PRA has continued with its expansion to the
region’s least developed markets – Vietnam, Sri Lanka (via
Ordel), Myanmar and Cambodia.
PRA had in July 2012 acquired a 47.5%-stake in Odel Plc,
a fashion retailer listed on the Colombo Stock Exchange in
Sri Lanka, and in August 2012 started a joint venture in
Parkson Myanmar with a 70%-stake.
� An asset-light model
PRG and PRA lease premises from mall owners. Given
that the bulk of the group’s business is based on
concessionaire sales (refer to Chart 3 and 4), PHB has
minimal inventory risks. Parkson’s direct sales mainly
constitute cosmetics.
� Well-mapped expansion on track
Three stores in China, which were delayed for opening last
year, are now on track for opening in 2013. To-date, the
Parkson store at Hefei 3 has opened. PRG has another 7
stores in the pipeline for opening in 2013. This will
increase gross floor area (GFA) by 14.7% to 2mil sqm.
PRA’s two new stores – one each in Kuching, Malaysia
and Surakarta, Indonesia – had opened during 1HFY13 in
November 2012. Another five new stores are in the
pipeline by end-FY13F for Southeast Asia – 1 in Malaysia,
2 in Vietnam, 1 in Indonesia and 1 in Myanmar. Hence,
GFA is estimated to rise by 11.4% to 702,000 sq m.
DECELERATION IN CONSUMER SPEND FOR
PARKSON RETAIL GROUP (PRG)
� Weaker-than-expected same store sales growth (SSSG) affected by the weaker consumer spend
Historical lows in SSSG. PHB’s weaker-than-expected
1HFY13 results were affected by a deceleration in
consumer spend, particularly in China and Vietnam. China
and Vietnam have been adversely impacted by slow
economic growth, resulting in weak consumer spend.
Evidently, PRG’s SSSG for 1QFY13 and 1HFY13 slumped
to new historical lows, at 1% and 2% contractions,
respectively. It is worth noting that SSSG during the global
financial crisis in June 2009 was at 4.9%.
Over the past three years, SSSG had remained healthy,
averaging at low-to-mid teens.
� What affected the weakening of PRG’s performance?
Cutting down on corporate gifts. Corporate gifts
constitute c.15% of sales.
Intensification of competition in retail landscape. We
believe the SSSG contraction was also largely attributed to
intensification of competition among the China-based
retailers such as Golden Eagle and Intime. There appears
to be a footfall shift towards more appealing malls amid
their proliferation in numbers.
Parkson undergoes facelifts once every 4-5 years. Stores
in Shanghai and Beijing are currently under
refurbishments.
Start-up losses. Operating losses were incurred in new
stores. In 2012, 4 stores were opened, while 3 stores
delayed opening to this year. In addition, PRG closed 2
stores last year.
� Expansion continues with additional 14.7% and 7.9% of gross floor area for FY13F and FY14F, respectively
PRG has a pipeline of 13 new stores over FY13F-FY14F
(see Table 4).
The GFA is expected to rise by 14.7% on the back of 8
more stores. Five new stores with a total GFA of
164,520sqm (+7.9%) are expected to open in FY14F.
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AmResearch Sdn Bhd 3
� Challenging FY13F – growth to be flat at best
Slower rate of expansion. Expansion will continue, but at
a slower pace, targeting five new stores p.a. (vs. 8-10
previously). Management has highlighted that store
expansion will be more selective in China, going forward.
Expansion will centre on cities (80%) in which it is already
present given the ‘know-how attained’, while the remaining
20% of the expansion will be in cities new to the group.
We are uncertain about China’s turnaround in SSSG,
given that the key issue stems from an increased
competitive landscape. We believe China’s 3Q SSSG
growth would remain flat, at best, and any recovery will be
gradual.
Hence, we have assumed a contraction of 2% in SSSG for
FY13F and a mild rebound to +1% for FY14F.
Product differentiation and merchandising mix. PRG is
focus on improving the merchandising mix based on
individual cities’ preferences to circumvent the slowdown in
SSSG.
Online shopping presence. PRG started e-commerce in
November 2012 for goods sold at Parkson, to mitigate the
rising popularity of online retailers. Response has been
rather slow as shoppers are unaware of this service.
Therefore, PRG will be actively promoting the e-commerce
site in the next 1-2 years.
Higher self-owned property ratio. Apart from just
expanding via new outlets, PRG aims at a higher ratio of
self-owned properties, underpinned by stable recurring
income. PHB targets to own 1 mall for every 4 malls
operated.
PRG will continue to be on a lookout for third-party stores
or properties for acquisition and greenfield malls.
The Qingdao acquisition last year for a site to build a
shopping mall will be ready in 2-3 years’ time.
PARKSON RETAIL ASIA’S (PRA) CONTINUOUS
EXPANSION IN SOUTHEAST ASIA
PRA’s expansion strategy in Southeast Asia is through
physical store openings, which are facilitated by
partnerships with property developers or the acquisition of
existing retail businesses.
Besides having 39 stores in Malaysia, PRA is present in
Vietnam, Indonesia (via Parkson/Centro) and Sri Lanka
(via Odel) with 8, 9 and 17 stores, respectively.
Since its foray into Indonesia in June 2011, PRA’s
expansion in Southeast Asia has take it to the region’s
least developed markets, such as Vietnam, Cambodia, Sri
Lanka and Myanmar.
Given the region’s fast-emerging middle-class, PRA is on a
constant lookout for opportunities to enter into other
Southeast Asia markets.
� Parkson Malaysia, the second largest revenue contributor, with market share of c.20%
The group’s biggest markets. Malaysia is the second
largest contributor to the group at c.26% of revenue,
followed by China. Parkson Malaysia is the second-largest
department store operator in the country commanding a
20% market share, after The Store Corp.
Sustaining a healthy SSSG growth. We have assumed
SSSG growth of 5% each for FY13F and FY14F, riding on
a buoyant consumer spending.
PRA’s pipeline for Malaysia is to open 2 stores each in
FY13F and FY14F (+>20,000sqm). So far, Plaza Merdeka,
Kuching had opened its doors in November 2012.
Introduction of e-commerce. In October 2012, similar to
Parkson China, Parkson Malaysia had introduced an e-
commerce portal.
� Indonesia’s growth to remain buoyant at favourable and stable SSSG
Via Centro department store. In June 2011, PRA made
its foray into Indonesia through the acquisition of Centro
Department Store from Indonesia’s Sentosa Group. PRA
owns 9 stores (8 Centro and 1 Kem Chick), spanning
across Indonesia.
Dual branding strategy to continue. The group intends
to continue its dual branding in Indonesia – Centro targets
at the low-middle income, while Parkson targets the upper-
middle.
Given Parkson's premium brand compared to Centro, the
former’s expansion will be concentrated in the first-tier
cities such as Jakarta, Medan and Surabaya.
There is no plan to convert the Centro brand to Parkson for
the time being. Nonetheless, the group could potentially
convert some Centro stores into Parkson in due course
should the population becomes even more affluent.
Stable SSSG. Backed by strong domestic consumption in
Indonesia coupled with a growing middle to upper class,
we have assumed a stable SSSG of 5% respectively for
FY13F and FY14F.
Centro at Surakarta opened in November 2012, and
another Centro is targeted to open in FY13F. Parkson’s
full-fledged store is earmarked to open in FY14 at St.
Moritz 2, Jakarta, and occupying 17,101 sq m. The
remaining two stores for FY14F are under Centro.
� Slower growth in Vietnam translates into continued weakness in SSSG
No sign of recovery in the short term. Vietnam recorded
a negative SSSG in 1HFY13. This was underpinned by an
overall negative growth in Vietnam owing to the policies
Parkson Holdings 21 March 2013
AmResearch Sdn Bhd 4
implemented by the government to manage inflation and
reduce the trade deficit.
As a result, this has led to a slower economic growth in the
country. The Vietnamese economy could see some
improvements in the next 1-2 years.
SSSG to possibly turn positive in FY14F. Vietnam
SSSG contracted by 6.3% and 7.4%, for 1QFY13 and
1HFY13, respectively. Note that 9% SSSG was achieved
in FY12.
Management expects a flat SSSG growth (or a possible
contraction) in FY13F amid a weakening Vietnamese
economy. Nonetheless, they foresee a potential recovery
in SSSG in FY14F.
As such, we forecast SSSG in Vietnam to contract by 5%
in FY13F and to register a zero SSSG growth in FY14F, in
view of a slight recovery in the economy.
But, nothing is stopping new store openings.
Underpinned by a potential recovery in the Vietnamese
economy in the next 1-2 years, the group has four
confirmed new stores over FY13F-FY14F (2 stores for
each FY) – three in Ho Chi Minh and one in Danang.
These would contribute an additional 75,484 sq m of GFA.
For now, PRA is focused on store refurbishments and
renovations, along with securing good locations at good
rental rates.
� Leveraging on experience in Vietnam to push into Myanmar market
First Parkson store in Myanmar earmarked for April.
The first store will be in Yangon (commercial city of
Myanmar) occupying a GFA of 4,000 sq m. This small
Parkson store is located in Yoma’s FMI Centre, a 12-storey
commercial building located in Yangon’s up-market
Pabedan Township.
JV with established local real estate players. PRA owns
a 70%-stake in Parkson Myanmar, with Yoma Strategic
Holdings Ltd (20%) and First Myanmar Investment
Company Ltd (10%) holding the balance. These partners
are well-established players in the local real estate
landscape.
Penetrating into untapped Myanmar with less risks.
The JV enables PRA to establish and expand its Parkson
network across Myanmar. Given the group’s first-mover
advantage in the rapidly-growing retail sector, the JV is a
positive. This is further underpinned by a largely under-
served middle- to upper-income segment.
Gradual expansion. Before venturing further in Myanmar
or eventually having a full-fledged Parkson store in 2-3
years, this first store will enable PRA to survey and gauge
the market’s retail preferences.
� Not lagging behind, Cambodia is next!
As growth in Southeast Asia is leaning towards the less
developed countries, PRA’s first Parkson in Cambodia’s
capital city of Phnom Penh will open in FY14F, with a total
GFA of 36,500 sq m.
� First foreign retailer to enter Sri Lanka, with Odel Plc buy (47.6%-owned)
Leveraging on Odel’s retail experience. PRA made a
maiden entry into Sri Lanka via the acquisition of 47.5% of
retailer Odel Plc last year. This will be a strategic platform
for the group to further expand into the larger Indian sub-
continent.
Odel has 17 stores with a total 150,000 sq f of floor space
and an online shopping website.
A good strategy to shorten learning curve. PRA intends
to eventually set up a Parkson departmental store upon
the understanding of the Sri Lankan market. Expansion
plans in Sri Lanka or in other India sub-continent markets
are likely to be rolled out in 1-2 years’ time through store
openings and development of its own floor space.
No change to business model for now. The group does
not intend to change Odel’s business model. Nonetheless,
similar to PRA’s strategy in Indonesia, we believe PRA has
the ability to propel Odel one level up by developing the
brand.
Potential upside to spur earnings. Given PRA’s track
record in managing Centro in Indonesia, we see a potential
upside in Odel’s earnings growth. As such, we have
assumed a 5% SSSG.
PARKSON HOLDINGS (PHB) AIMS TO OWN
MORE MALLS
� Complex management provides stable recurring income
Presently, KL Festival City (99% occupancy rate) is the
only mall in PHB’s portfolio. Meanwhile, the upcoming
second mall is located in Malacca. It is expected to be
ready within 2-3 years at a total cost of RM400mil.
Under PHB’s mall concept, Parkson department store will
remain as an anchor tenant and the remaining retail space
will be leased to third-party retailers.
PHB targets to have an enlarged number of shopping
malls, going forward. The group’s experience in running
departmental stores should provide an advantage to it
being a mall owner.
Despite a small contribution from the shopping mall
management arm (c.1% of group revenue) for now, it is
seen as a growing earnings stream.
Parkson Holdings 21 March 2013
AmResearch Sdn Bhd 5
� Targets to own 1 out of 4 malls PHB operates
The group is on a constant lookout for opportunities for
greenfield malls. Having said, PHB is open to acquiring
existing malls and refurbish them, if feasible.
More importantly, PHB targets to own 1 out 4 malls in
which it is operating.
� A possible REIT-ing of own malls?
Given PHB’s preference for an asset-light business model,
a possible REIT structure could take-off in the foreseeable
future. This is feasible upon PHB owning at least 5 malls
and the income stream becoming considerable large.
FINANCIALS
� Overall positive SSSG assumption
PHB’s earnings growth is underpinned by expansion in its
gross floor area (GFA) and healthy same store sales
growth:-
(1) Continued expansion in GFA of a minimum of 10%-
15% per annum, supported by a pipeline of new store
openings. The group has earmarked 15 and 13 new
stores for FY13F and FY14F, respectively.
(2) Enlarged network of outlets – China (FY13F: +8 and
FY14F: +5) and Southeast Asia (FY13F: +7 and
FY14F: +8) coupled with forays into Myanmar and
Cambodia. Our annual new store assumption is at 2
for each market.
(3) We assume healthy SSSG for Malaysia and
Indonesia, riding on a buoyant consumer spending.
This should cushion a muted outlook in China and
Vietnam, given the near-term cyclical SSSG that is
presently in negative territory.
(4) Stable margins from a lucrative concessionaire-based
business model. Concessionaire sales constitute the
bulk of the group’s revenue (PRG: 90%, PRA: 80%)
(5) Small but growing earnings stream from its shopping
complex management arm in KL Festival City.
Meanwhile, the total merchandise margin should remain
flattish at c.19%. Fashion & apparel and cosmetic &
accessories are expected to dominate the group’s revenue
at between 80%-90%.
� Strong balance sheet, huge cash pile
Balance sheet remains healthy with a strong cash pile of
RM1.5bil as at end-1HFY13.
� 1HFY13 disappointed, owing to decelerating consumer spend in China
1HFY13 revenue grew 3% YoY attributed to new stores
contributions and positive SSSG in Malaysia (4%) and
Indonesia (7%).
However, given the slow economic growth in Vietnam and
China, which resulted in weak consumer spend. As such,
SSSG for Vietnam and China were in negative territory of
7% and 2%, respectively.
Further to that, consumer spending was delayed in
2QFY13 due to late arrival of the Lunar New Year.
Compared to 2QFY12, the Lunar New Year spend was
mainly captured at that point.
One-off items such as acquisition and start-up costs
arising from the e-commerce venture had also contributed
to a weaker 1HFY13.
� No official dividend policy
PHB has no official dividend policy. Since FY11, the group
has maintained a payout of at least 40% of earnings.
In light with the historical payout ratio, we have assumed
the same for FY13F-FY15F. This translates into DPS 2.6
sen and 3.2 sen, respectively, for FY13F and FY14F.
� Key catalysts
Other key catalysts:-
(1) Recovery in consumer spend in China and
Vietnam;
(2) Faster-than-expected new store openings; and
(3) Better-than-expected cost management
initiatives.
KEY RISKS
Key risks include:-
(1) Significant slowdown in consumer spending in all
countries – China, Malaysia, Indonesia, Vietnam,
Cambodia and Sri Lanka;
(2) Delay in commencement of store openings; and
(3) Higher-than-expected costs for new stores, e-
commerce and JVs.
Parkson Holdings 21 March 2013
AmResearch Sdn Bhd 6
VALUATIONS
� Re-initiate with a HOLD; fair value: RM4.43/share
We are re-initiating coverage on Parkson Holdings Bhd
(PHB), with a HOLD at a fair value of RM4.43/share,
based on a sum-of-parts valuation for FY14F.
For FY13F, we project a healthy SSSG at 6% for Malaysia
and Indonesia, riding on stable consumer spending. This
should cushion a muted outlook in China and Vietnam,
given the near-term cyclical SSSG that is in negative
territory.
FY13F-FY15F growth will be driven by an enlarged
network of outlets – China (FY13F: +8 and FY14F: +5) and
Southeast Asia (FY13F: +7 and FY14F: +8), coupled with
the foray into Myanmar and Cambodia. Our annual new
store assumption is at two for each market.
It is trading at 15x PE FY14F, on par with to its 5-year
historical mean and at a 33% discount to local peer AEON
Co (M) Bhd’s (AEON Mk Equity, Non-rated) 20x.
TABLE 1 : SUM-OF-PARTS VALUATION BASED ON FY14F
Stake %
Valuation
multiple (x)
Value
(RMmil)
Parkson Retail Group 51.5 10.0 2,075.6
Parkson Retail Asia 67.6 11.0 985.2
Total 3,060.7
Net cash/(debt) 2,013.5
Total 5,074.2
Share capital (mil) 1,145.4
Discount factor 0.0
Fair value (RM/share) 4.43
Upside/(downside) to current share price (%) (4.5)
Source: Company / AmResearch
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AmResearch Sdn Bhd 7
TABLE 2 : PHB STRUCTURE
Source: Company / AmResearch
TABLE 3 : GROSS FLOOR AREA AND OPERATING AREA
Source: Company / AmResearch
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AmResearch Sdn Bhd 8
CHART 1 : 1HFY13 PHB REVENUE BREAKDOWN
Malaysia
26%
China66%
Vietnam
3%
Indonesia
4%
Property &
investment holding1%
Source: Company / AmResearch
CHART 2 : 1HFY13 PHB EBIT BREAKDOWN
Malaysia21%
China75%
Vietnam1%
Indonesia3%
Property & investment holding
0%
Source: Company / AmResearch
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AmResearch Sdn Bhd 9
CHART 3 : 1HFY13 SOUTHEAST ASIA SALES & MERCHANDISING MIX
Source: Company / AmResearch
CHART 4 : 1HFY13 SOUTHEAST ASIA SALES & MERCHANDISING MIX
Source: Company / AmResearch
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AmResearch Sdn Bhd 10
TABLE 4 : CHINA EXPANSION PLAN
Source: Company / AmResearch
TABLE 5 : SOUTHEAST ASIA EXPANSION PLAN
Source: Company / AmResearch
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AmResearch Sdn Bhd 11
CHART 5 : B BAND CHART
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CHART 6 : PE BAND CHART
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AmResearch Sdn Bhd 12
TABLE 6 : FINANCIAL DATA
Income Statement (RMmil, YE 30 Jun) 2011 2012 2013F 2014F 2015F
Revenue 2,925.4 3,447.5 3,592.2 4,333.3 4,975.0
EBITDA 971.3 1,026.5 1,000.8 1,121.6 1,188.9
Depreciation (141.6) (190.9) (240.8) (250.3) (258.5)
Operating income (EBIT) 829.7 835.6 760.0 871 930.4
Other income & associates 0.1 0.2 1.5 1.5 1.5
Net interest (24.6) 51.9 14.5 28.9 56.3
Exceptional items 0.0 0.0 0.0 0.0 0.0
Pretax profit 805.3 887.7 776.0 901.7 988.2
Taxation (198.6) (219.0) (194.0) (225.4) (247.1)
Minorities/pref dividends (258.2) (289.5) (315.6) (344.0) (375.0)
Net profit 348.4 379.2 266.4 332.3 366.2
Core net profit 348.4 379.2 266.4 332.3 366.2
Balance Sheet (RMmil, YE 30 Jun) 2011 2012 2013F 2014F 2015F
Fixed assets 1,557.2 1,686.3 1,765.6 1,835.3 1,895.8
Intangible assets 1,235.1 1,309.5 1,375.0 1,375.0 1,376.0
Other long-term assets 517.9 905.2 699.6 699.6 536.5
Total non-current assets 3,310.2 3,901.0 3,840.1 3,909.8 3,808.3
Cash & equivalent 2,740.6 3,031.0 2,813.2 3,277.0 3,773.0
Stock 246.4 281.7 298.2 369.6 435.7
Trade debtors 362.6 573.4 482.2 581.7 667.9
Other current assets 604.4 0.0 9.8 9.8 9.8
Total current assets 3,954.1 3,886.1 3,603.4 4,238.1 4,886.4
Trade creditors 1,702.9 2,043.2 1,576.2 1,953.4 2,302.7
Short-term borrowings 1,189.0 0.2 0.2 0.2 0.2
Other current liabilities 46.8 45.1 46.9 46.9 46.9
Total current liabilities 2,938.7 2,088.5 1,623.2 2,000.5 2,349.8
Long-term borrowings 761.4 1,260.6 1,060.6 860.6 660.6
Other long-term liabilities 194.7 222.8 264.2 457.1 507.3
Total long-term liabilities 956.1 1,483.4 1,324.9 1,317.7 1,167.9
Shareholders’ funds 2,228.2 2,680.2 2,837.6 3,039.3 3,242.2
Minority interests 1,141.4 1,535.0 1,657.8 1,790.5 1,933.7
BV/share (RM) 2.07 2.46 2.61 2.79 2.98
Cash Flow (RMmil, YE 30 Jun) 2011 2012 2013F 2014F 2015F
Pretax profit 805.3 887.7 776.0 901.7 988.2
Depreciation 141.6 190.9 240.8 250.3 258.5
Net change in working capital 62.4 94.3 (392.4) 206.4 197.1
Others (252.1) (271.5) (195.5) (226.9) (248.6)
Cash flow from operations 757.1 901.4 428.9 1,131.4 1,195.3
Capital expenditure (196.6) (324.1) (320.0) (320.0) (319.0)
Net investments & sale of fixed assets 22.8 (30.0) (30.0) (30.0) (30.0)
Others (8.8) (211.3) 0.0 0.0 0.0
Cash flow from investing (182.6) (565.4) (350.0) (350.0) (349.0)
Debt raised/(repaid) (934.4) 499.2 (200.0) (200.0) (200.0)
Equity raised/(repaid) 0.0 0.0 0.0 0.0 0.0
Dividends paid (283.5) (362.1) (108.8) (130.6) (163.2)
Others 1,170.2 (350.9) 10.5 11.5 11.5
Cash flow from financing (47.7) (213.7) (298.3) (319.1) (351.7)
Net cash flow 526.8 122.3 (219.4) 462.3 494.5
Net cash/(debt) b/f 1,461.2 (377.0) (19.4) 662.3 694.5
Net cash/(debt) c/f 786.5 1,770.3 1,752.4 2,416.2 3,112.3
Key Ratios (YE 30 Jun) 2011 2012 2013F 2014F 2015F
Revenue growth (%) 7.5 17.8 4.2 20.6 14.8
EBITDA growth (%) 9.6 5.7 n/a 12.1 6.0
Pretax margins (%) 27.5 25.7 21.6 20.8 19.9
Net profit margins (%) 11.9 11.0 7.4 7.7 7.4
Interest cover (x) 33.7 n/a n/a n/a n/a
Effective tax rate (%) 24.7 24.7 25.0 25.0 25.0
Net dividend payout (%) 48.5 60.1 40.8 39.3 44.6
Debtors turnover (days) 45 50 54 45 46
Stock turnover (days) 29 28 29 28 30
Creditors turnover (days) 206 198 184 149 156
Source: Company, AmResearch estimates
Parkson Holdings 21 March 2013
AmResearch Sdn Bhd 13
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