Parkson logo seen at Parkson Maju Junction in Kuala Lumpur. (Pic taken by Hafidz Mahpar for Star Online)
KUALA LUMPUR: PublicInvest Research is retaining its Neutral recommendation on Parkson Holdings Bhd
with an unchanged target price of of 75 sen.
It said on Tuesday Parkson had announced a settlement agreement in relation to two litigations from a long-time dispute regarding store ownership and entitlement to profits.
The settlement agreement was entered between its unit Serbadagang Holdings Sdn Bhd with five other companies. They are Dalian Tianhe Building Company Ltd; Hefei Parkson Xiaoyao Plaza Company Ltd; Shenzhen Xinhui Industrial Company Ltd; Dalian Tianhe Parkson Shopping Mall Company Ltd and Dashang Group Company Ltd.
“We view the agreement positively as Parkson is expected to record net gain of RM25mil which would contribute to its FY18 earnings.
“This would also be in addition to further compensation to be negotiated by end-June 2018. Our Neutral call is maintained, with TP of 75 sen unchanged,” it said.
PublicInvest Research said there were two litigations. The first was the Hefei Parkson Litigation, involving DT Building and Hefei Parkson in relation to a disputed ownership of the 51% equity interest in Anshan Tianxing Parkson Shopping Centre Company Ltd.
The second was Serbadagang litigations, involving the DT Building and Serbadagang in relation to Serbadagang's claims for its entitlement to the profits of Dalian Tianhe Parkson and a department store of Dalian Tianhe Parkson in Shenyang, China.
The settlement agreement and compensation agreement entail that Hefei Parkson will pay the relevant dividends to Serbadagang as compensation.
For now, Hefei Parkson will pay 100mil renminbi (RM62mil) to Serbadagang by April 30, 2018, and the two parties will further negotiate on a possible additional compensation, which should be in a legally binding agreement by June 30, 2018.
In total, the relevant dividends which is entitlement of profits, amounted to 348mil renminbi (RM215.76mil) from 2003-2017. In addition, all parties agreed to abandon their claims in previous arrangements.
“The rationale behind the agreement was that PHB has ceased to have management control over Dalian Tianhe Parkson since 2005 and has been working on resolving the conflict without success.
“For the Hefei Parkson Litigation, there is likelihood for the group to lose the appeal, hence pursuing the settlement agreement would be a better move. Parkson is also expected to gain RM25mil, to be included in its FY18 earnings,” it said.
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