Remain neutral call with unchanged target price (TP) of RM0.72
- China, albeit managing to improve its SSS from -9% in the previous quarter to -7% currently, is not out of the woods yet, we believe. Continued weak spending and consumption patterns coupled with stiff competition and the rapid development of e-commerce platforms will are key challenges. To recap, Parkson has already stepped up its efforts to remain relevant, having launched a new mobile shopping application, Parkson Plaza in June to leverage on digital platforms in enhancing customers’ shopping experiences. However, it has not made any meaningful inroads as yet and the path to profitability appears to be challenging near term.
- Southeast Asia segments. Other segments including home-ground Malaysia also registered losses, amidst weak consumer sentiment. In Malaysia, SSS was -7% due to less buying days following the shift in the Hari Raya calendar. However, revenue in Malaysia rose 5% on opening of new stores. Similar issues happened in Indonesia. As for Vietnam and Myanmar, the retail market is getting crowded with more competition. All told, we still expect the Southeast Asian segment performance to remain subdued near term.