PublicInvest positive over Parkson's China transformation

Parkson retail mall in China

KUALA LUMPUR: PublivInvest Research is positive over Parkson Holdings Bhd's China operations' net profit of CNY44.1mil for 1QFY18.

It said the result was a significant jump over 1Q17's net profit of CNY1.1mil, while revenue also grew 3.1% on year to CNY1.18bil.

"The stronger earnings was attributed to higher consumption in conjunction with the Lunar New Year. This is the first quarter of net profit after three quarters of net losses last year. 

"At operating level, this is the fifth consecutive quarter in which PRG reported profit."

PublicInvest Research said Parkson Retail Group reported a decline in gross sales proceeds due to the closure of six underperforming stores in 2017, which the research house views positively.

It added that same-store sales growth increased 1.7% in 1QFY18 which is a positive sales uptrend compared to the previous corresponding quarter.

The research house noted that the first quarter is typically the stronger quarter in China due to seasonality and looks towards further improvements in the following quarters.
 
It  maintained its earnings estimates and neutral call with a target price of 75 sen.