HDBSVR: Buy Parkson on share price weakness

HDBSVR: Buy Parkson on share price weakness

Tags: Hwang DBS Vickers Research | Parkson Holdings | Parkson Retail Group

Written by Hwang DBS Vickers Research
Thursday, 28 January 2010 09:17

KUALA LUMPUR: Hwang DBS Vickers Research says PARKSON HOLDINGS BHD []’s share price weakness is a buying opportunity. Its share price has fallen from its recent high of RM6.20 to RM5.51 currently.

“Maintain Buy and RM6.30 TP (RNAV -derived),” it said on Thursday, Jan 28.

Its said the sell-down – which might be due to China’s credit tightening initiatives – is excessive as there is still strong growth potential in China’s huge retail sector.

The December 2009 monthly data showed a 17.5% jump y-o-y (vs Nov 2009’s 15.8%) in retail sales.

Hwang DBS Vickers Research said an added positive is Parkson’s strong balance sheet (RM226 million net cash at end-September 2009) and healthy free cash flow (RM370 million in FY11F).

Foreign interest is returning with 25.4% foreign shareholding in Nov 2009 (versus a low of 20% in early 2009).

“Separately, the discount of Parkson’s market cap to its share of HK-listed Parkson Retail Group’s market cap has narrowed to 30% from a one-year high of 40.5%, but is still above its historical average of 25%. This suggests Parkson may continue to outperform Parkson Retail Group,” it said.