Parkson sees renewed buying interest

by **Cals** Mon 04 Apr 2016, 02:03

Parkson sees renewed buying interest

By Supriya Surendran / The Edge Financial Daily | April 1, 2016 : 10:26 AM MYT

This article first appeared in The Edge Financial Daily, on April 1, 2016.

KUALA LUMPUR: Parkson Holdings Bhd’s shares, which hit a one-year low of 87.5 sen on March 9 after falling from as high as RM2.05 on May 6 last year, saw renewed buying interest yesterday, which pushed its share price up by as much as 21.3% or 19.5 sen to RM1.11.

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The counter, however, pared some of the gains later and ended the day at RM1.03 — still up 11.5 sen or 12.6% — after 23.42 million shares were exchanged, valuing Parkson at RM 1.09 billion.

Parkson’s call warrants, Parkson-CO (which rose 6 sen to 7.5 sen) and Parkson-CP (up 3 sen at 3.5 sen) were also the two most actively traded counters on the local bourse yesterday, with 159.76 million and 60.46 million warrants traded, respectively.

The sudden surge in price and volume of trading in Parkson’s shares led Bursa Malaysia to issue an unusual market activity (UMA) query to the company yesterday , to which Parkson, which operates retail department stores in Malaysia, China and Vietnam, replied it was not aware of any reason that could contribute to the UMA.

Analysts tracking the stock were equally stumped when contacted by The Edge Financial Daily on what could have triggered the movement in Parkson’s share price.

“There were privatisation rumours circling, but they were unsubstantiated. So it’s really anyone’s guess,” said one analyst.

Parkson slipped into the red in its latest quarter ending Dec 31, 2016 (2QFY16), with a net loss of RM31.44 million, compared to the RM110.61 million profit it reported a year ago, though revenue rose 6% to RM1.04 billion from RM981.68 million.

AffinHwang Capital, in its Feb 25 note on Parkson, has downgraded its call on the stock to “sell”.

“We believe that operations in the group’s key markets will remain challenging in the near term, and hence we are downgrading the stock to a sell with a lower target price of 81 sen,” the research house said then.

Kenanga Research, also in a Feb 25 note, also downgraded the stock from “market perform” to “underperform”.

“We are downgrading our target price from RM1.01 to 82 sen as we impute the consensus’ latest lowered target prices for both its listed operating units, Hong Kong listed Parkson Retail Group Ltd and Singapore listed Parkson Retail Asia Limited,” said Kenanga.

PublicInvest Research, which has a “neutral” call on Parkson with a target price of 88 sen based on its Feb 25 report, said Parkson continues to face challenges, including in the management of its new business ventures and new stores’ costs, especially in its China operations, as it works on transforming into a lifestyle concept mall.