Parkson ups stake in China firm

Parkson Holdings subsidiary, Serbadagang Holdings SB, has received a court action to proceed with its proposed acquisition of a 43.31% stake in Qingdao No 1 Parkson Co Ltd (Qingdao Parkson) from China Qingdao No 1 Store (China Qingdao) for 185m yuan cash (RM92.5m). The acquisition would enable the group to tap into a larger share of the earnings of the Qingdao Parkson in which the group’s shareholding would be raised from 52.6% to 95.91%. The acquisition was expected to be completed by the first quarter of 2010.

Comment: The acquisition of Qingdao stores will allow Parkson Holdings to inject the stores into Parkson Retail Group (PRG). We expect Qingdao stores to be injected into PRG after the injection of Shantou and Shenyang stores. No change in our estimates as we have factored in a 95.9% stake contribution from the Qingdao stores. Maintain BUY at a TP of RM7.06.

(OSK Research)