Thursday, August 21, 2014

Parkson Retail Asia results disappoint, but it is not without reasons.

Parkson retail Asia has announced a Q4 NP of only 3 mio

See results

Reasons for poor performance.

1) Currency weakness of Indonesia and for most part of the year, the Ringgit

2) 7 new stores open, including pre-opening expenses, which should be one-off.

However, the reopening of the three stores in Malaysia did not improve both topline or bottom line as I would expect.

It is still a cash generating business, and profitable one.

However, if we extrapolate this quarter earnings, FY earning will only be 12 mio, Eps will only be about 2 cents.

2015 Q1  is the quarter with no opening of new stores, and ringgit and rupiah would have be from the same low base for comparison (Provided it don't fall further), we would be able to tell if the new loss making stores are still bleeding profusely. Given the same stores sales are actually improving(With exception of Vietnam), the new stores just need  to reduce their losses (Not a tall order since pre-opening expenses would be removed.), we should see an improvement in the meagre earnings of 3 million.

Nonetheless, one have to be patience, I see 2015 to be a worse year than 2014 till to indigestion.

2016, should be the year to look out for.

Sell first? 

Well, I cannot timed the market on this one, I would not accumulate at current prices too, but not selling it too. Only at prices below 70 cents would I take a second look at this counter.

My dream of 90 cents is dashed, the counter should be badly bashed when market opened tomorrow.

 

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