Thursday, February 18, 2016

Parkson Retail Asia - cheaper than cabbage

PRA is a net-net company now (current assets slightly above total liabilities) 

Let's look at its problems.
1) Weakening Ringgit
2) Poor consumers sentiments at even its home turf Malaysia
3) Declining profits (excluding one-off disposal gains)
4) Coporate governance 1 - making a young daughter director with executive powers
5) Coporate governance 2 - 2 independent directors have resigned or quit
6) Coporate governance 3 - Complex owner structure of parents company, just look it's sister company PRG propose transfer/ sale of stake from left hand to right hand. It got voted down, which I cannot understand.
7) Poor execution records. Hanoi expansion is a disaster. PRG, it's sister company, helmed by the same chairman, also incur high ligitation costs for Beijing Metro 
8) Indonesia profits unpredictable, lastest 2Q show a small loss. 
9) FCF is QoQ is worsening 
10) Payables is ballooning.

The valuation:
1) No debts
2) Still profitable at every quarters minus the one-off closure cost of Hanoi mall
3) Giving good dividends since IPO, and a 2 cents dividends (13 mio) would mean a yield of above 10 percent. Give a 1 cent dividend is not too bad. I need another quarter to see if FCF improve, it's short record of 6 years data show it's a FCF generating machine.
4) From PE perspective, it is not demanding, if we believe it can do 2 cents EPS in the longer term.
5) From NAV perspective, I am not interested since it is asset light and inventories, receivables etc might be marked down when "problems" happen.

When I last post about PRA, I say I will
Look at it only when it is near 20 cents, so here am I, what do you think?

( not vested )


  1. So what do you think of Parkson Retail now? Cortina reporting good sales in Malaysia post GST era.

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