The news: Parkson Holdings Bhd, a Kuala Lumpur based department store operator that makes most of its revenue from China plans to enter new markets in South east Asia to tap the region’s growing affluence. The retailer that has 102 outlets in China, Malaysia, Vietnam and Indonesia sees Myanmar, Thailand and the Philippines as potential markets, says Alfred Cheng, managing director of the units listed in Hong Kong and Singapore. Parkson plans to open 24 more stores in Asia by the end of next year, followed by its first in Cambodia in the first half of 2013.
Our thoughts: It appears that management is taking on a more ambitious expansion path. Last we spoke to them a month ago, they mentioned a more conservative 7-8 store expansion for 2012 and 2013. Parkson Retail Asia (PRA) which is the listed entity in Singapore comprises of 50 stores (including one supermarket) in Malaysia, Vietnam and Indonesia occupying a total retail space of 497,108sqm. With a market capitalization of S$806m, it is currently trading at 20x FY11 earnings. Its peers Sheng Siong is trading at 13x while Dairy Farm at 27x. We currently do not have a rating on the stock.
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