Should you take advantage of PARKSON 5657 PARKSON HOLDINGS BERHAD’s current weakness?

 Should you take advantage of  PARKSON 5657 PARKSON HOLDINGS BERHAD’s current weakness?



Parkson Holdings Bhd is looking to trade higher after it closed above the 17 sen resistance on June 9, showing bullish momentum.


The counter reached its 52-week high of 20 recently but tapered off to close at 18 sn on June 14.


Still, Parkson share price has rise some 15.6% in the last 5 days.


Towards the upside, the near-term resistance level is seen at 20 sen followed by 22 sen.


At the current share price, it is trading above its 52-week low of 12 sen.


The excitement on Parkson is understandable given the improving sentiments.


The department store operator have benefited from higher festivities spending.


In addition, Parkson is able to cater to the consumer down-trading practices as consumers shift to more cost-conscious spending patterns.


According to analysts, share prices of consumer stocks have undergone a correction phase in the past two quarters.


Take note that if this correction phase persists, it could present an opportunity to re-evaluate the sector and potentially identify undervalued companies that have long-term potential.


However, analysts point out that consumer companies have been affected by rising labour, energy, rental and raw material costs, resulting in a margin squeeze.


And these costs are largely to persist and might continue to affect the companies in the near term.


Financially, Parkson showed pretty solid performance.


It returned to the black with a net profit of RM20.7 milion in the first quarter ended Mar 31, 2023 from a net loss of RM8.6 million a year ago.


This is on the back of flattish revenue growth at RM837.8 million versus RM828 million.


Its Malaysia retailing operations continued to witness a strong recovery in its stores' footfall in tandem with the full lifting of movement restrictions, along with the pent-up demand from shoppers.


The encouraging revenue, together with the continuous efforts in optimising operating efficiencies, had enabled the operations to achieve an operating profit of RM56 million for the current quarter under review, an improvement of 60% from the RM35 million reported a year ago.


Parkson Malaysia has 38 stores as at 31 March 2023.


Although Parkson China began to see recovery of shopper traffic to the retailing stores following the full lifting of COVID-19 related prevention and control measures in December 2022, the sales performance of RM619 million was slightly weaker year-on-year.


Nevertheless, the operations reported a higher operating profit of RM58 million for the current quarter under review, contributed by the continuous efforts in optimising operating efficiencies and cost control measures.


As at 31 March 2023, there are 43 Parkson stores in 29 cities across China.


The company is closing its only store in Vietnam, Parkson Saigon Tourist Plaza, which recorded a revenue of RM2 million with operating loss of RM1 million in 1QFY23.


While consumers are bracing for higher cost of living due to rising inflation, Parkson will likely do well as the shopping trend is not going to taper off in the near term.


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