Parkson Holdings Bhd’s share price contracted as much as 7.14% to its nine-and-half-year low in the morning trade, making it one of the top losers across the bourse, after the department store operator sank into losses in its latest quarterly results.
At 2.41pm, Parkson rebounded a little from its intra-day low (RM1.04) to trade at RM1.06, still down six sen or 5.36%, after some 571,800 shares changed hands.
The current price gives Parkson a market capitalisation of RM1.16 billion.
In its fourth quarter ended June 30 (4QFY15), Parkson posted a net loss of RM90.95 million or 8.75 sen per share, compared with a net profit of RM26.76 million or 2.56 sen per share last year, largely on weaker retail sentiments.
This is despite revenue for 4QFY15 rising 5.2% to RM859.04 million, from RM816.51 million last year, mainly due to slightly better figures from China, Vietnam, Myanmar and Indonesia.
The group’s retailing division registered a weaker set of results for FY15, with revenue increasing only by 4% to RM3.64 billion; while operating profit contracted by 41% to RM190 million, compared with FY14.
Parkson said its operation in Malaysia saw same-store sales contracting 4.5% for FY15, as consumer sentiments were affected by rising cost of living and the depreciating ringgit.
For the full year, Parkson’s net profit plunged 69% to RM42.84 million or 4.06 sen per share, against RM138.15 million or 13 sen per share in FY14; while revenue rose 5.4% to RM3.74 billion, against RM3.55 billion last year.
Despite the lower earnings, Public Investment Bank has upgraded Parkson to ‘outperform’, as it views its weak share price as an opportunity to accumulate, but lowered its target price to RM1.48.
“We believe the recent slump in share price has deemed Parkson attractive, considering there is still growth in sales and profits going forward, assuming no one-offs incurred,” said the investment bank.
“We think further weakness in Parkson’s share price is not justified, as the group’s fundamentals remain intact, with more than RM2.7 billion cash and undemanding valuation of 10.6 times and 10 times of financial year 2016 (FY16) and financial year 2017 (FY17) respectively,” it added.
Additionally, PIVB said the recent announcement of 10 sen per share cash distribution, which will come after its internal reorganisation is completed, is fairly rewarding to shareholders, yielding 8.9% of its current share price
