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S'pore listing likely to unlock Parkson's investment value



GROWTH DRIVE: The proposed listing will be positive for Parkson as it will enable the group to unlock value for its retail assets in Southeast Asia.

KUCHING: Parkson Holdings Bhd (Parkson) is aiming to unlock the value of its investments via better valuation and appreciation of its earnings growth potential, notably via a proposed listing on the Main Board of the Singapore Exchange.

To recap, the retail group announced a proposal to list its 90.1 per cent subsidiary Parkson Retail Asia Pte Ltd (Parkson Asia). The exercise was due for completion by end-2011, pending approvals from the Singapore Stock Exchange, the Monetary Authority of Singapore and Parkson’s shareholders.

AmResearch Sdn Bhd (AmResearch) stated in a report that while details such as timeline, pricing, structure and size had yet to be finalised, the initial public offering (IPO) would be in a combination of new shares for subscription as well as existing shares offered for sale.

However, the research house took note of an international news agency news wire that quoted a possible IPO size of S$500 million.

In a separate report, ECM Libra Capital Sdn Bhd (ECM Libra) stated that the proposed listing would be positive for Parkson at it would enable the group to unlock value for its retail assets in Southeast Asia.

Furthermore, the listing would raise capital for store expansion and further acquisition of store locations for Parkson’s property management arm.

Via Parkson’s internal restructuring as part of the acquisition of Indonesian retailer PT Tozy Bintang Sentosa Group (TS) from PT Mitra Samaya (MS), PHB now had a 90.1 per cent equity stake in Parkson Asia, while MS owned the balance.

Under the agreement, MS was also granted a conditional put option to dispose of its entire stake in Parkson Asia to Parkson for a pre-determined value of US$37 million, exercisable by June 2014.

Essentially, Parkson Asia offers investors exposure to high consumption growth via its retail operations in Malaysia, Indonesia, Vietnam and Cambodia. Currently, there are 36 stores in Malaysia, seven in Vietnam and six in Indonesia.

More importantly, the bulk of the fund-raising exercise would enable Parkson Asia to embark on a more aggressive expansion plan in Indonesia. It was targeting to expand its network in Indonesia to up to 25 outlets by 2015.

AmResearch expected Parkson’s final quarter results (ending June), to be released following Parkson Retail Group’s second quarter financial year (2QFY11) forecasted results on August 19, to meet its full-year forecast of RM381 million.

Based on a sum-of-parts valuation method, AmResearch derived a target price of RM6.40 per share while ECM Libra’s pegging was at RM6.40 per share.

 

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