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February 9, 2012

SINGAPORE EQUITY
Investment Research

DMG & Partners Research
Initiation of coverage
Private Circulation Only
CONSUMER





Melissa Yeap
+65 6232 3897
melissa.yeap@sg.oskgroup.com
PARKSON RETAIL ASIA
NEUTRAL

Price SS$1.52
Terence Wong, CFA
+65 6232 3896
terence.wong@ sg.oskgroup.com


Previous n/a

Target SS$1.50

Retail


PRA is a department store operator with 37
Parkson stores in Malaysia, seven in
Vietnam, six Centro stores and one Kem
Chicks supermarket in Indonesia. It is 68%
owed by Parkson Holdings Bhd.

Stock Profile/Statistics

Bloomberg Ticker PRA SP
STI 2,982
Issued Share Capital (m) 677
Market Capitalisation (US$m) 1,029
52 week H | L Price (S$) 1.550 1.045
Average Volume (000) 722
YTD Returns (%) 22
Net gearing (%) Net Cash
Altman Z-Score Na
ROCE/WACC 2.2
Beta (x) Na
Book Value/share (S) 22

Major Shareholders (%)

Parkson Holdings Berhad 67.6
PT Mitra Samaya 7.4
JP Morgan Chase & Co 7.0




Share Performance (%)

Month Absolute Relative
1m 20.2 9.3
3m 22.1 17.8
6m Na Na
12m Na Na


6-month Share Price Performance




Firing three cylinders
We initiate coverage on Parkson Retail Asia with a NEUTRAL rating and
DCF-derived TP of SS$1.50 (WACC of 9.2% ,terminal growth rate of 2%).
This translates into an implied FY13F P/E of 18x, in line with its Southeast
Asian department store peers. We like the stock as it offers investors: 1) A
unique multi-country exposure into three high growth developing countries
(Malaysia, Vietnam and Indonesia) which are driven by strong domestic
consumption; 2) It is a well-established chain, holding the number one and
two positions in the department store space in Vietnam (37% market share)
and Malaysia (19% market share) respectively; 3) It only entered Indonesia
in June 2011 via M&A which has given it a 2.5% market share but we
believe this share will grow once PRA works its magic. We expect FY12-14F
earnings to grow at a CAGR of 24% largely driven by same store sales
growth and new store openings.

Expect FY12-14F earnings CAGR of 24%. We are forecasting FY12-14F
earnings to grow at a CAGR of 24%, spurred largely by same store sales growth
as well as new store rollout. Apart from the one leasehold property in Hai Phong,
Vietnam which it acquired for S$49m (22,603 sq m), the rest of its retail space
are on long term leases of 15 years. Hence, expansion is not expected to incur
heavy capex. The Company intends to distribute 40-50% of its profits to
shareholders.

FV of S$1.50, NEUTRAL. We have a DCF-derived TP of S$1.50 (WACC: 9.2%
and terminal growth rate: 2%) which translates into FY13F P/E of 18x, in-line with
its Southeast Asia peers in the department store space. Over the past year, its
HK-listed sister company, Parkson Retail Group (3368 HK), which operates 49
stores in China has traded at an average P/E of 23x while its Malaysian-listed
parent company, Parkson Holdings (PKS MK) traded at 18x.

FYE 30 Jun 2010A 2011A 2012F 2013F 2014F

Turnover (S$m) 333.0 367.3 474.0 564.7 681.7
Net profit (S$m) 21.4 35.0 45.9 55.4 70.3
% Chg YoY 87.0 63.8 31.0 20.9 26.9
Consensus (S$m) nm nm 45.9 56.0 68.2
EPS (S) 3.6 5.9 6.8 8.2 10.4
DPS (S) nil 9.4 3.0 3.7 4.7
Div Yield (%) nil 6.2 2.0 2.4 3.1
ROE (%) 15.2 28.4 30.4 30.0 31.0
ROA (%) 7.3 12.2 13.1 13.3 14.2
P/E (x) 42.5 25.9 22.5 18.6 14.7
P/B (x) 6.5 7.4 6.8 5.6 4.5
Source: Company and OSK|DMG Estimates
.






1.10
1.13
1.20
1.23
1.30
1.33
1.40
1.43
1.30
1.33
1.60
4-nov-11 18-nov-11 2-uec-11 16-uec-11 30-uec-11 13-!an-12 27-!an-12
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TABLE OF CONTENTS


Company description 3

Products/merchandise 7

Retail Network 9

Use of IPO Proceeds 11

Investment Merits 12

Investment Risks 17

Earnings Outlook 18

Valuation 22

Peer Comparison 25


APPENDICES:

Appendix 1: Department Store Industry Outlook: Malaysia 26

Appendix 2: Department Store Industry Outlook: Vietnam 28

Appendix 3: Department Store Industry Outlook: Indonesia 30

Appendix 4: Management Profile 32


Financial Tables 33


Disclaimer 34





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COMPANY DESCRIPTION

Parkson Retail Asia (PRA SP) is a South East Asia department store operator with 36
Parkson stores in Malaysia, seven in Vietnam and six Centro department stores as well as
one Kem Chicks supermarket in Indonesia. Overall it has 50 stores spanning across
497,108 sqm of retail space.

It is the sister company of Hong Kong listed Parkson Retail Group Ltd (PRG) (3368 HK).
PRA and PRG are 68% and 52% owned by parent, Malaysian-listed, Parkson Holdings
Berhad (PKS MK) respectively. Parkson Holdings Berhad is, in turn, 20% owned by
Malaysian tycoon, Tan Sri William Cheng who also controls the Lion Group.

Figure 1: The Parkson Group

Source: Company data

Figure 2: PRA Milestones


Source: Company data

1
st
store in Malaysia 24 years ago, now #2. Parkson established its first department store
in Malaysia 24 years ago in 1987. That store is still in existence but since then it has
expanded its retail network to 36 stores across the country, occupying a total leased retail
space of 325,766sqm. According to Euromonitor, Parkson was the number two department
store in Malaysia in 2010, with a 19.2% market share of total retail sales.

Ventured into Vietnam in 2005, now #1. The Group expanded its footprint into Vietnam in
2005 where it now operates and manages seven Parkson branded department stores,
located in Ho Chi Minh City (5), Hanoi (1) and Hai Phong (1). These seven stores occupy a
total leased retail space of 102,062sqm and owned retail space of 22,603 sqm. Total retail
space amounts to 124,665sqm. It was ranked the top department store in Vietnam, with a
market share of 36.7% in 2010.

Entered Indonesia in June 2011, 2.5% market share. The Group recently entered
Indonesia via the acquisition of PT. Tozy Sentosa (TS) in June 2011. TS is the operator of
six Centro branded department stores and one Kem Chicks branded gourmet
supermarket in Indonesia, occupying a total leased retail space of 46,677 sqm. It has a 2.5%
market share in Indonesia.





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Overall 50 stores across 497,108sqm. PRA operates 49 departmental stores and one
gourmet supermarket across Malaysia, Vietnam and Indonesia.

Figure 3: Summary of Store Network

Source: Company data
* Indonesia includes the gourmet supermarket

The following maps show the geographic distribution of its stores in Malaysia, Vietnam and
Indonesia.

Figure 4: Parksons 37 stores in Malaysia

Source: Company data





















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Figure 5: Parksons 7 stores in Vietnam

Source: Company data

Figure 6: Parksons 7 stores in Indonesia

Source: Company data











See im
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Figure 7: FY11 revenue breakdown by country
Source: Company da

Malaysia: Still home base.
forward we still expect Malaysia to be its main earnings contributor.

Figure 8: FY09
Source: Company data



















0
30
100
130
200
230
300
330
400
S$m
See important disclosures at the end of this publication
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: FY11 revenue breakdown by country
Company data
Malaysia: Still home base. The Group derives ~80% of sales from Malaysia and going
forward we still expect Malaysia to be its main earnings contributor.
: FY09-FY11 revenue growth
Company data
Malaysia,
87%
Vietnam,
12%
Indonesia,
1%
l?09 l?10
262.8
293.5
320.9
37.4 39.4
2year revenue CAC8 of 11

6

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The Group derives ~80% of sales from Malaysia and going
forward we still expect Malaysia to be its main earnings contributor.

Malaysia,
87%
l?11
320.9
42.4
4.0
Malaysla
vleLnam
lndonesla
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Products/Merchandise

Parkson offers a wide range of merchandise in its departmental stores. The Group
categorises them into four categories. Merchandise sales make up ~96% of revenues.

Fashion and apparel
Cosmetics and accessories
Household, electrical goods and others
Groceries and perishables

Figure 9: Merchandise sold in FY11

Source: Company data


Merchandise are sold via two avenues: direct sales and through concessionaires.

Direct sales

For direct sales, the Group basically sources and sells its own direct-purchase merchandise.
Most of its direct sales includes sales in its household, electrical goods and other and
groceries and perishables product categories as well as cosmetic products in Malaysia.


Concessionaire sales

The Group enters into concessionaire agreements with certain suppliers (known as
concessionaires) who display and sell their products in designated areas in its stores.

Concessionaires are responsible and bear the expenses for the design, display and fitting out
of their counters as well as for repair and maintenance while the Group provide general
facilities such as lighting, air conditioning as well as customer service training to the
concessionaires sales staff to ensure certain standards are met.

Fashion and apparels and cosmetics and accessories account for the bulk of
concessionaire sales except in the case of Malaysia where cosmetics are sold under direct
sales.








Fashion &
apparel
55%
Cosmetics &
accessories
27%
Household
14%
Grocerries
3%
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A standard concessionaire agreement will specify the type of product to be sold as well as
price points. Concessionaires are not allowed to alter their product mix nor price their
products in the Groups stores higher than elsewhere in the same country. Agreements are
subject to yearly renewals.

A turnover commission in the form of a percentage of sales is agreed upon and charged on
concessionaires, typically based on a agreed minimum commission amount which is
determined by a minimum sales target. The minimum commission amount typically ranges
from 15%-30% (excluding groceries and perishable goods) depending on the type of
product.

Sales from concessionaire sales are collected by the Group and then paid out to
concessionaires according to their respective credit terms after deduction of relevant
expenses, fees and commissions. The Group also collects certain other fees from
concessionaires that include promotional, administration, credit card handling and loyalty
programme fees.

Vietnam has a higher portion of concessionaire sales. Between Malaysia and Vietnam,
Vietnam has a higher percentage of concessionaire sales at 96%:4% vs Malaysias
75%:25%.

The table further breaks down merchandise sales for the respective countries including
Indonesia.

Figure 10: Breakdown in Merchandise Sales for 3 Countries
Source: Company data

Concessionaire sales: ~25% of merchandise sales. The Group generated merchandise
sales of S$659.9m, S$767.5m and S$851.6m in 2009, 2010 and 2011 of which proceeds
from concessionaire sales amounted to S$497.3m, S$598.3m and S$671.1m accounting for
25.4%, 25.0% and 25.3% of revenues respectively.

Rental income: Derived from subleasing certain designated areas of its stores to
restaurants, fast food outlets, salons, supermarkets and photo shops; and

Consultancy and management service fees: Derived from its three managed stores in Ho
Chi Minh City, Vietnam that it manages










Stated in S$m S$ % S$ % S$ % S$ %
Malaysia
-Concessionaire sales 382.0 71% 467.8 74% 528.4 75% 528.4 75%
-Direct sales 157.8 29% 164.1 26% 173.5 25% 173.5 25%
-Subtotal 539.9 100% 631.9 100% 701.9 100% 701.9 100%
Vietnam
-Concessionaire sales 115.3 96% 130.4 96% 134.6 96% 134.6 96%
-Direct sales 4.8 4% 5.1 4% 5.4 4% 5.4 4%
-Subtotal 120.1 100% 135.5 100% 139.9 100% 139.9 100%
Indonesia
-Concessionaire sales 8.1 82% 84.0 81%
-Direct sales 1.7 18% 20.0 19%
-Subtotal 9.8 100% 104.0 100%
TOTAL 659.9 767.5 851.6 945.8
Note:
- Only commissions on concessionaire sales form part of reported revenue. Total concessionaire sales above is for ref only
- Merchandise sales for TS is for full year financial year 2011 including period prior to acquisition on 9 June 2011
2009 2010 2011 2011 (includes TS)
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RETAIL NETWORK

MALAYSIA

36 department stores
Total retail space of 325,766 sq m

Figure 11: Retail Network in Malaysia



Source: Company data
















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VIETNAM

7 department stores
Total retail space of 124,665 sq m
Spent ~S$49m to acquire leasehold property in Hai Phong with space of 22,603 sq m

Figure 12: 7 Outlets in Vietnam

Source: Company data


INDONESIA

Entered market via acquisition of PT Satozy Sentosa (TS) in June 2011
TS operates the six Centro branded departmental stores and one Kem Chicks
supermarket in Indoensia.

Figure 13: 7 Outlets in Indonesia

Source: Company data

2-3 years for a store to turn profitable. On average, it takes between 2-3 years for a new
store to turn profitable. As a store matures, sales per sqm will rise.

















"Centro" brand
1 Plaza Semanggi Nov 2003 8 7,305 Jakarta
2 Discovery Shopping Mall Dec 2004 7 7,501 Kuta, Bali
3 Margo City Mall Mar 2006 5 6,402 Greater Jakarta
4 Ambarrukmo Plaza Jun 2006 5 7,045 Yogyakarta
5 Mall of Indonesia Sep 2008 3 9,232 North Jakarta
7 Galaxy Mall Aug-11 7,572 Surabaya
"Kem Chicks" brand
7 Pacif ic Place Nov 2007 1,620 Jakarta
Total floor space 46,677
No Indonesia Stores
Date
Commenced
Age
(Years)
Retail space
(sqm)
City
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Use of IPO Proceeds

With an IPO offer price of S$0.94 per share, the Group generated net proceeds of S$69.2m,
which has been earmarked for the following purposes:

~S$60m (US$48.8m) or 79.8 cents for each S$1 of gross proceeds will be for new store
openings in Malaysia, Indonesia, Vietnam and Cambodia;

~S$5m (US$4.1m) or 6.6 cents for each S$1 of gross proceeds will be for IT investment
and

~S$4.2m (US$3.4m) or 5.6 cents for each S$1 will be for maintenance capital
expenditure in Malaysia, Vietnam and Indonesia.

Capex will be on new stores and refurbishments. Capex for FY12 will be approximately
S$41m, comprising S$16m for existing stores and S$20m for new stores and S$5m for IT
investment. Capex for FY13 is projected to be S$45m, comprising S$5m for existing stores
and S$40m for new stores. We estimate capex to range at a similar amount for FY14.

Capital expenditure for new stores varies by country. In Indonesia it is higher at US$2-3m
while in Malaysia and Vietnam cost are on par and lower at US$1-2m per store.














































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INVESTMENT MERITS

Multi-country exposure: Malaysia, Vietnam and Indonesia. PRA is one the unique
department store player that offers a multi-country exposure. Moreover, all the countries it is
operating in are projected to experience healthy economic growth. Between 2011 and 2015,
department store retail sales are projected to grow at a CAGR of 4.5% in Malaysia, 9.1% in
Vietnam and 10.7% in Indonesia.

No. 2 in Malaysia with 19.2% market share. Having been in Malaysia over the past 24
years, PRA has established itself as the number two department store in the country with a
19.2% market share in terms of retail sales. It is only second to AEON which owns the chain
of Jusco department stores in Malaysia with a 42.5% grip on the market.

. and market share has been growing. We note that PRAs market share in Malaysia
has been gradually growing from 16.9% in 2008 to 17.9% in 2009 and to 19.2% in 2010.

Figure 14: Market share of top department stores in Malaysia

Source: Euromonitor International 2011
* sales for Parkson includes only non-food sales product sales while others likely to include a mix of food and non-
food products


Number one in Vietnam, 36.7% market share. Parkson is the clear market leader in the
Vietnam department store landscape holding a 36.7% market share in terms of retail value
sales in 2010. It is considered the pioneer in the department store business, starting its
operations there since 2005. It was the first company to operate a chain of department stores
whilst others were stand-alone outlets.

where market share has also been growing. PRAs market share in Vietnam has also
been growing like in Malaysia. In 2008, it held a 26.5% market share before rising to 32.0% in
2009 and 36.7% share in 2010. Its other main competitor is the Diamond brand department
store owned by International Business Center Corporation in Ho Chi Minh City.














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Figure 15: Retail value sales market share of departmental store players
Source: Euromonitor International 2011
* sales for Parkson includes only non-food sales product sales while others likely to include a mix of food and non-
food products

Vietnam: big department stores gaining popularity. It appears that the big department
store retailers are gaining market share in the expense of smaller retailers and mom and
pop shops which has seen its share fall from 45.4% in 2008 to 33.6% in 2010.

Fast growth in Indonesia. PRA has a 2.5% share of the Indonesian department store
industry, which was valued at US$2.8b in 2010 and is projected to grow at a CAGR of
10.7% between 2011 and 2015.

In June 2011, PRA spent US$12.8m to acquire TS, which operates the Centro branded
department stores in Indonesia and one Kem Chicks gourmet supermarket. The purchase
was for US$12.8m plus a sale of 9.9% in PRA to PT Mitra Samaya(MS), the former owners
of TS at S$15.8m. The stake has been reduced to 7.4% with the IPO.

Figure 16: Retail value sales market share of departmental store players
Source: Euromonitor International 2011
* Sales for Parkson include only non-food sales product sales while others likely to include a mix of food and non-
food products





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Well-recognised brand name in Malaysia and Vietnam. Having been in the Malaysian
departmental store scene over the past 24 years, the Group has managed to establish itself
as one of the premium departmental stores. Its popularity in Malaysia and Vietnam is
evident in the numbers where it is ranks number two and number one respectively.

. and China via sister company. Apart from having a presence in Malaysia and Vietnam,
Parkson is also a well recognised brand in China where its sister company, Parkson Retail
Group (3368 HK) operates 46 stores as at 30 June 2011.

leading it to be a preferred partner. Due to its strong brand presence and dominant
market position, it has become the the preferred point of entry for international brands
planning to enter the Malaysian and Vietnamese retail markets via department stores. This
allows it to offer customers a better mix of merchandise.

The table below illustrates the awards and accolades it has won.

Figure 17: Parksons Awards and Accolades

Source: Company data

Asset light: depends largely on a concessionaire model. PRA adopts a largely asset
light strategy, relying in large part on concessionaire sales. In Malaysia, the mix between
concessionaire and direct sales is 75%/25% and in Vietnam 96%/4%. In Indonesia the mix
is 82%/18%. The mix lower in Malaysia as cosmetics are sold via direct sales there.

concessionaire sales accounted for 79% of Group merchandise sales. Overall,
concessionaire sales make up for 79% of total merchandise sales in 2011. The proportion
has been growing over the past several years growing from 75.4% in FY09, 78.0% in FY10
to 78.8% in FY11.

Concessionaire sales are appealing as PRA collects all payments from customers and later
only remits a portion of these proceeds to its concessionaires. It typically has credit terms of
30-90 days from suppliers. Its turnover days was 55 days, 54 days and 56 days for FY09,
FY10 and FY11 respectively.

By operating largely on the concessionaire model, the risks and costs of holding inventories
as well as fit-out, selling and shrinkage costs are all borne by the concessionaires. As
inventory is directly managed by each concessionaire, overall working capital requirement is
also lowered.










Award Awarding Body Year Awarded
5th Most Valuable Brand in Malaysia The Edge Malaysia 2008 -2009
Overall Best Retail Outlet Malaysia Retailers Association 2009/2010
for Parkson Pavilion 2008/2009
Malaysia Retailers Association 2008/2009
Best Department Store Malaysia Retailers Association 2010/2011
Parkson KLCC 2007/2008
Parkson Subang Parade 2006/2007
Parkson One Utama
Most Favourite Vietnamese Brand Sai Gon Giai Phong newspaper 2006-2010
Ho Chi Minh City People's Committee
Most Famous Brand in Vietnam AC Nielson 2008
Vietnam Chambers of Commerce & Industry
Cosmopolitan magazine 2010
The Assoc of Accredited Advertising Agents
Malaysia
Innovative Shopping Outlet
(Department Store) category - Parkson
Pavilion
Readers' Choice Award: Lifestyle
Department Store - Centro
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Large pool of loyalty cardholders. PRA participates in a multi-party loyalty programme in
Malaysia through BonusLink, which is operated by a third party and allows cardholders to
use the card at a variety of other speciality retail and service outlets. In Vietnam and
Indonesia, it has its own loyalty programmes.

Loyalty programme members are entitled to points for purchases which can later be
redeemed for discount vouchers or products. Members also receive special discounts on
selected items and are eligible to participate in special promotional events at stores.


As at 30June2011, the Group has over 1.28m active loyalty cardholders in Malaysia, over
65,000 active loyalty cardholders in Vietnam and approximately 200,000 active loyalty
cardholders in Indonesia.

Access to this large database of information enhances Parksons ability to understand its
customers purchasing habits, tailor product and brand mix as well as customize marketing
and promotional activities.

50% of sales are generated by loyalty card holders. Evidence of the effectiveness of
its loyalty cards is reflected in its sales. In FY11, 54.5%, 50.0% and 51.0% of total
merchandise sales in Malaysia, Vietnam and Indonesia respectively were generated by
loyalty cardholders.

Same stores sales growth (SSSG) that beats industry. Stores in Malaysia had a SSSG
of 11% in FY10 and 9.7% in FY11 beating the Malaysian department store industrys -0.3%
in CY09 and 10.7% in CY10.

In Vietnam, SSSG was 26.6% in FY10 and 22.4% in FY11, beating industrys 9.9% in CY09
and 5.8% in CY10.

We forecast annual SSSG of 7% in Malaysia, 9% in Vietnam and 5% in Indonesia from
FY12-14.

Efforts taken to further increase store productivity include among others, to increase its
average unit selling price, value per transaction and customer traffic. To achieve those goal,
it will periodically change merchandise offerings, maximise customer flow and optimising
space allocation for each concessionaire or supplier.

Expanding existing store network. The Group will ramp up the rollout of its retail network
across Malaysia, Vietnam and Indonesia. A store typically takes approximately two to three
years to become profitable with sales volume growing as an outlet matures.

In Indonesia, the Group has opened a new store in Indonesia at Galaxy Mall in August 2011,
aims for another one and it will lease additional floor space for its Centro store in Bali. We
believe down the road, it will introduce Parkson branded department stores alongside its
Centro stores in Indonesia. In Malaysia it has opened a new store at KL Festival City and
and in Vietnam, it will add one more. In total we should expect a total of four new stores by
June 2012.

For FY13, rate of expansion is faster and we can expect two new stores in Malaysia, 2-3 in
Vietnam and 4-5 in Indonesia. Total new stores would be 7-8.

Capital expenditure for new stores varies by country. In Indonesia, it is higher at US$2-3m
while in Malaysia and Vietnam cost are on par and lower at US$1-2m per store.














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Figure 18: New Store Pipeline


Source: Company data

















































Location City/Country Lease Area (sq m)
Oct-11 KL Festival City Kuala Lumpur, Malaysia 11,653
Oct-11 Parkson Landmark 72 Hanoi, Vietnam 29,038
Oct-11 Summarecon Mal Serpong Tangerang, Indonesia 10,261
1Q FY13 Setia City Mall Kuala Lumpur, Malaysia 11,459
1Q FY13 Nu Sentral Kuala Lumpur, Malaysia 12,833
1Q FY13 B8 Mall Johor Bahru, Malaysia 10,394
2Q FY13 Metropolitan Grand Bekasi, Indonesia 11,370
2Q FY13 Parkson Cantavil Ho Chi Minh, Vietnam 15,293
2Q FY13 Parkson Emperor Complex Ho Chi Minh, Vietnam 11,448
3Q FY13 Parkson Cambodia Phnom Penh City, Cambodia 30,000
3Q FY13 Plaza Merdeka Kuching, Malaysia 12,554
3Q FY14 Vinacapital Commercial Center Da Nang, Vietnam 18,791
3Q FY14 TD Plaza Saigon Ho Chi Minh, Vietnam 30,000
Target
Commencement
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INVESTMENT RISKS

Forex risks. PRAs earnings are denominated in Malaysian Ringgit, Vietnamese Dong and
Rupiah while it reports its earnings in Singapore dollar. It is particularly affected by the
SGDMYR rate. That said, this is just an accounting issue as all profits generated in the
respective countries are usually re-invested in store refurbishments and new store openings.

Dependance on Malaysia. In FY11, Malaysia accounted for 80% of PRAs revenues. It is
largely dependant on the market. Should there be any economic downturn or political
instability, it will be negatively impacted. That said, we do not see this risk as high as it has
been operating in the country for the past 27 years.

Failure in Indonesia. While PRA has proven itself in Malaysia and Vietnam, the Indonesian
department store landscape is very different. When it ventured into Vietnam in 2005, it was
the pioneer there giving it the first mover advantage. Indonesias market is rather mature
with the two big giants PT Ramayana Lestari Sentosa Tbk and PT Matahari Department
Store Tbk dominating the scene. Its acquired Centro department stores just hold a 2.6%
market share. There is the risk that it may not be able to succeed as well in Indonesia as it
has done in Malaysia and Vietnam.

Choosing the wrong location for new stores. There is the risk that being new to the
Indonesian and Cambodia scene, the Group might choose the wrong site for its new outlet
and have to shut down. However we view this risk as low as the Group has had many years
of experience in site location under its belt.



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EARNINGS OUTLOOK

FY11-14F earnings CAGR of 26%. We forecast Group earnings to grow at a CAGR of 26%
between FY11-14, driven by same store sales growth as well as new store openings.
Demand should remain robust, supported by healthy economic growth in its operating
countries of Malaysia, Vietnam and Indonesia. Furthermore, we should see improving
margins stemming from a better merchandise mix as well as economies of scale.

Figure 19: PRA Revenue and Earnings Forecast


Source: Company data and OSK|DMG estimates


Revenue can be broken down into four main categories:

1. Direct sales
2. Commissions from concessionaire sales
3. Consultancy & management service fees
4. Rental income









In S$m Jun-09 Jun-10 Jun-11 Jun-12F Jun-13F Jun-14F
Revenue 301.2 333.0 367.3 474.0 564.7 681.7
Other income: - - - - - -
-Finance income 1.8 3.3 4.9 4.3 5.1 6.7
-Other income 3.2 3.2 5.8 4.3 4.5 4.7
- - - - - -
Chgs in merchandise inventories & consumables (133.1) (140.4) (151.7) (193.8) (229.8) (274.0)
Employee benefits expense (29.8) (35.5) (34.8) (44.6) (51.4) (61.3)
Depreciation & amortisation (13.5) (15.5) (15.2) (15.2) (20.8) (26.1)
Promotional & advertising (5.4) (5.1) (7.2) (9.0) (10.7) (13.0)
Rental expenses (66.3) (67.1) (69.6) (90.1) (106.7) (128.2)
Finance costs (0.1) (0.1) (0.5) (0.2) (0.2) (0.2)
Other expenses (40.7) (43.4) (47.4) (61.6) (72.3) (85.9)
Total Expenses (288.8) (307.1) (326.4) (414.5) (492.0) (588.6)
- - - - - -
PBT 17.4 32.5 51.6 68.1 82.3 104.4
Tax (5.3) (10.1) (15.8) (21.1) (25.5) (32.4)
PAT 12.1 22.4 35.8 47.0 56.8 72.0
MI (0.7) (1.1) (0.8) (1.1) (1.4) (1.7)
PATMI 11.4 21.4 35.0 45.9 55.4 70.3
Gross Profit 168.1 192.5 215.6 280.1 334.8 407.6
EBIT 15.8 29.2 47.3 72.7 87.6 111.3
EBITDA 29.2 44.7 62.5 87.9 108.4 137.4
Margins
Gross Profit 55.8% 57.8% 58.7% 59.1% 59.3% 59.8%
EBIT 5.2% 8.8% 12.9% 15.3% 15.5% 16.3%
EBITDA 9.7% 13.4% 17.0% 18.5% 19.2% 20.2%
PBT 5.8% 9.8% 14.0% 14.4% 14.6% 15.3%
PAT 4.0% 6.7% 9.8% 9.9% 10.1% 10.6%
PATMI 3.8% 6.4% 9.5% 9.7% 9.8% 10.3%
Tax % -30.3% -31.0% -30.6% -31.0% -31.0% -31.0%
MI % of PAT -5.8% -4.8% -2.3% -2.4% -2.4% -2.4%
Growth 0.0% 0.0% 0.0% 0.0% 0.0%
Revenue 10.5% 10.3% 29.0% 19.1% 20.7%
EBIT 85.3% 61.6% 53.7% 20.6% 27.1%
EBITDA 53.0% 39.6% 40.7% 23.4% 26.7%
PBT 86.7% 58.8% 31.9% 20.9% 26.9%
PAT 84.9% 59.6% 31.2% 20.9% 26.9%
PATMI 87.0% 63.8% 31.0% 20.9% 26.9%
FY11-14F earnings CAGR 26%
See important disclosures at the end of this publication
19
See important disclosures at the end of this publication



DMG Research
OSK Research
OSK Research DMG Research
Figure 20: Revenue Breakdown by Category


Source: Company data

We have forecast a slight dip in the % of concessionaire sales over direct sales in FY13 as
PRA enters Cambodia, a new market. We feel it might take a year before it secures more
concessaionaires and will have to initially rely more on direct sales.

Figure 21: Merchandise Sales


Source: Company data


55% of merchandise sales from fashion & apparels. PRA derives the bulk of its
merchandise sales from the sale of fashion and apparels.

Cambodia to start operations in 3QFY13. Management targets to start its Cambodia store
in Phnom Penh in 3QFY13 (Jan-Mar 2014). The store will occupy 30,000sqm of retail space.
We are forecasting a very conservative S$800 average sales per sqm in FY13 for the one
quarter that it will be under operation and estimating a 10% YoY growth in average sales per
sm to S$880 in FY14. We have assumed a merchandise sales mix of 80% direct sales and
20% concessionaire sales. In terms of commission rates from concessionaire sales, we are
forecasting 20%.

Cambodia is expected to contribute S$6.0m to Group revenue in FY13 in its first quarter of
operations and S$26.4m in FY14.








In S$m Jun-09 Jun-10 Jun-11 Jun-12F Jun-13F Jun-14F
Revenue 301.2 333.0 367.3 474.0 564.7 681.7
By Category
1) Direct Sales 162.6 169.2 180.6 233.4 279.1 347.0
2) Commissions from concessionaire sales 126.3 149.6 169.5 221.5 264.5 311.0
3) Consultancy & management service fees 0.5 0.9 1.4 1.6 1.7 1.9
4) Rental income 11.8 13.2 15.9 17.5 19.4 21.7
Total Revenue 301.2 333.0 367.3 474.0 564.7 681.7
% of revenue
Direct Sales 54% 51% 49% 49% 49% 51%
Commissions from concessionaire sales 42% 45% 46% 47% 47% 46%
Consultancy & management service fees 0% 0% 0% 0% 0% 0%
Rental income 4% 4% 4% 4% 3% 3%
growth %
Direct Sales 0% 4% 7% 29% 20% 24%
Commissions from concessionaire sales 0% 18% 13% 31% 19% 18%
Consultancy & management service fees 0% 85% 53% 10% 10% 10%
Rental income 0% 12% 20% 10% 11% 12%
Total revenue 0% 11% 10% 29% 19% 21%
162.6
169.2
180.6
233.4
279.1
347.0
126.3
149.6
169.3
221.3
264.3
311.0
0
30
100
130
200
230
300
330
400
!un-09 !un-10 !un-11 !un-12l !un-13l !un-14l
ulrecL sales Commlsslon from concesslonalre sales
In S5m
See important disclosures at the end of this publication
20
See important disclosures at the end of this publication



DMG Research
OSK Research
OSK Research DMG Research
Other revenue/income

Other revenue or income apart from merchandise sales are consultancy and management
service fee and rental income.

Consultancy and management service fee is derived from its managed stores in Vietnam. In
FY11, fees rose by 53% or S$0.5m as a result of the opening of one new managed store in
Ho Chi Minh City in January 2011.

Figure 22: Consultancy & management service fee Figure 23: Rental income



Source: Bloomberg Source: Bloomberg


Figure 24: Breakdown of FY11 operating expenses



Source: Company data

COGS tied only to direct sales not concessionaire sales. In FY11, changes in
merchandise, inventories and consumables (COGS) accounted for 46% of total operating
expenses. This translated into a gross profit margin of 58.7%, up 0.9ppt from 57.8% in
FY10. We note that gross margins have gradually been improving as a result of higher
concessionaire sales.









0.3
0.9
1.4
1.6
1.7
1.9
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
!un-09 !un-10 !un-11 !un-12l !un-13l !un-14l
S$m
ConsulLancy & managemenL servlce fees
11.8
13.2
13.9
17.3
19.4
21.7
10
12
14
16
18
20
22
24
!un-09 !un-10 !un-11 !un-12l !un-13l !un-14l
S$m
8enLal lncome
Chgs in
merchandise
inventories &
consumables,
46%
Employee
benef its
expense, 11%
Depreciation &
amortisation, 5%
Promotional &
advertising, 2%
Rental
expenses, 21%
Finance costs,
0%
Other expenses,
15%
See important disclosures at the end of this publication
21
See important disclosures at the end of this publication



DMG Research
OSK Research
OSK Research DMG Research
Figure 25: % Operating expenses to revenue



Source: Company data

Do not expect A&P costs to fall dramatically. While PRA develops scale in its operations,
its operating expenses is expected to fall leading to margin expansion. While advertising and
promotion costs (A&P) usually trend lower, we do not expect it to fall dramatically as it has
just entered the Indonesian market and would need to fork out money to promote itself.
Likewise it will need to promote aggressively when it enters Cambodia.

. But overall overheads should trend lower. Other expenses such as staff costs and rent
should trend lower as a percentage of sales as it scales up in Indonesia and Cambodia.
Rents, labour costs and other overheads are cheaper in these countries.

Figure 26: Margin expansion



Source: Company data

Gradual margin expansion. As we expect PRA to derive economies of scale as it expands
its retail network, we should see some margin expansion going forward.





In S$m Jun-09 Jun-10 Jun-11 Jun-12F Jun-13F Jun-14F
Operating Expenses:
Chgs in merchandise inventories & consumables (133.1) (140.4) (151.7) (193.8) (229.8) (274.0)
Employee benefits expense (29.8) (35.5) (34.8) (44.6) (51.4) (61.3)
Depreciation & amortisation (13.5) (15.5) (15.2) (15.2) (20.8) (26.1)
Promotional & advertising (5.4) (5.1) (7.2) (9.0) (10.7) (13.0)
Rental expenses (66.3) (67.1) (69.6) (90.1) (106.7) (128.2)
Finance costs (0.1) (0.1) (0.5) (0.2) (0.2) (0.2)
Other expenses (40.7) (43.4) (47.4) (61.6) (72.3) (85.9)
Total Operating Expenses (288.8) (307.1) (326.4) (414.5) (492.0) (588.6)
Revenue 301.2 333.0 367.3 474.0 564.7 681.7
% total opex/ revenue -96% -92% -89% -87% -87% -86%
33.8
37.8
38.7 39.1 39.3 39.8
3.8
6.4
9.3 9.7 9.8 10.3
0
10
20
30
40
30
60
70
!un-09 !un-10 !un-11 !un-12l !un-13l !un-14l
Cross roflL A1Ml
See important disclosures at the end of this publication
22
See important disclosures at the end of this publication



DMG Research
OSK Research
OSK Research DMG Research
VALUATION

NEUTRAL with FV of S$1.50. We have a DCF-derived TP of S$1.50 (WACC: 9.2%, terminal
growth rate 2%) which implies a FY13 P/E of 18x, in line with its Southeast Asian peers in the
department store space. Its closest rival in Malaysia, AEON which owns the chain of Jusco
department stores is trading at a lower forward consensus P/E of 13x.

We think the premium valuation for PRA over AEON is justified given that it offers investors a
unique proposition by providing exposure into three high growth markets: 1) Malaysia, 2)
Vietnam and 3) Indonesia. Furthermore it operates on an asset light strategy, leasing all of its
retail space except for one site in Vietnam.

Over the past year, its HK-listed sister company, Parkson Retail Group (3368 HK), which
operates 49 stores in China has traded at an average P/E of 23x while its Malaysian-listed
parent company, Parkson Holdings (PKS MK) traded at 18x.

Figure 27: DCF-derived TP
Total PV 907
Cash 108.4
Debt 1.0
Fair value (S$m) 1,014
No of shares (m) 677
Value per share (S$) 1.50

WACC ( r ) 9.2%

Source: OSK|DMG estimates

Run up of ~62% since IPO. The popularity of Parkson is evident from the recent run up in
share price since its first day of trading. It had an IPO price of S$0.94 and opened at S$1.13
on its first day of trading. At last close of S$1.52, it is up ~62% from its IPO price.

Figure 28: Share price performance since IPO

Source: Bloomberg













1.00
1.10
1.20
1.30
1.40
1.30
1.60
4-nov-11 18-nov-11 2-uec-11 16-uec-11 30-uec-11 13-!an-12 27-!an-12
r|ce - S5
+62 fromIC pr|ce of S50.94
See important disclosures at the end of this publication
23
See important disclosures at the end of this publication



DMG Research
OSK Research
OSK Research DMG Research
Figure 29: PRA SP P/E Trading Band

Source: Bloomberg

Figure 30: Sister 3368HK P/E Trading Band

Source: Bloomberg













19.0
20.0
21.0
22.0
23.0
24.0
23.0
26.0
27.0
3-nov-11 17-nov-11 1-uec-11 13-uec-11 29-uec-11 12-!an-12 26-!an-12 9-leb-12
Mean: 22x
+1SD: 24x
-1SD: 20x
13.0
20.0
23.0
30.0
33.0
40.0
43.0
30-Sep-08 31-Mar-09 30-Sep-09 31-Mar-10 30-Sep-10 31-Mar-11 30-Sep-11
Mean: 28x
+1SD: 3Sx
-1SD: 22x
See important disclosures at the end of this publication
24
See important disclosures at the end of this publication



DMG Research
OSK Research
OSK Research DMG Research
Figure 31: PKS MK P/E Trading Band

Source: Bloomberg

PRAs Malaysian-listed parent, Parkson Holdings Berhad which owns 68% of the latter has
been trading at 18x P/E for the past year.

Figure 32: DMG vs consensus
OSK|DMG vs consensus
FY12 FY13 FY14

OSK|DMG Revenue 474.0 564.7 681.7
Consensus as at 9Feb12 454.5 528.3 609.3
variance % 4% 7% 12%

OSK|DMG PATMI 45.9 55.4 70.3
Consensus as at 9Feb12 46.9 57.5 70.0
variance % -2% -4% 0%

Source: Company data





























-
3.0
10.0
13.0
20.0
23.0
30.0
33.0
40.0
29-!un-01 29-!un-03 29-!un-03 29-!un-07 29-!un-09 29-!un-11
Mean: 11x
+1SD: 18x
-1SD: 4x
See important disclosures at the end of this publication
25
See important disclosures at the end of this publication



DMG Research
OSK Research
OSK Research DMG Research
Figure 33: Peer Comparison
Source: Bloomberg and OSK|DMG estimates



























S1CCk 8|oomberg 1|cker r|ce Net D]L (x) |e|d ()
9-Ieb-12 r 1 r2 r 1 r2 r 1 r2 r 1 r2 I12 I12
Southeast As|a department stores
AkkSCN kL1AIL ASIA L1D pra sp equ|ty 1.S2 22.S 18.6 6.8 S.6 11.4 9.4 30.4 30.0 (71.2) 2.0
ALCn CC (M) 8Pu aeon mk equlLy 7.63 13.6 13.7 2.2 2.2 6.1 3.4 13.7 14.8 (29.4) 2.1
Ml18A AulL8kASA 18k 1 mapl l[ equlLy 3,630.00 28.3 21.6 3.6 3.3 11.9 9.8 14.6 21.8 48.1 0.4
8AMA?AnA LLS1A8l SLn1CSA 1 rals l[ equlLy 800.00 14.2 12.3 2.0 2.0 6.6 3.9 13.8 13.2 (40.3) 3.8
8C8lnSCn uLA81MLn1 S1C8L u roblns Lb equlLy 43.00 30.3 24.4 3.7 3.3 16.2 13.0 23.3 20.3 (43.1) 1.4
Industry Average (ex-kA) 22.1 18.0 3.9 3.7 10.2 8.S 16.8 18.0 (16.2) 1.9
Southeast As|a supermarkets
uAl8? lA8M ln1L PLuCS L1u dfl sp equlLy 9.91 28.3 23.9 16.8 14.4 18.2 16.6 63.4 31.3 (28.2) 1.9
SPLnC SlCnC C8Cu L1u ssg sp equlLy 0.30 17.1 17.7 10.4 3.0 13.7 13.3 48.0 29.0 (99.3) na
SuM8L8 ALlA8lA 18l!A?A 18k amrL l[ equlLy 4,000.00 37.1 27.7 10.3 10.7 14.6 11.4 23.9 32.0 38.3 na
C ALL CL cpall Lb equlLy 38.00 32.2 26.4 13.1 12.8 17.1 14.7 36.3 43.2 (112.2) 1.7
8lC C SuL8CLn1L8 CL blgc Lb equlLy 122.00 23.3 22.2 4.6 4.4 12.3 10.9 14.7 17.1 (23.1) 1.6
SlAM MAk8C u8LlC CC L1u makro Lb equlLy 239.00 23.1 19.6 6.6 6.4 13.3 11.7 21.0 31.1 (42.9) 3.4
Industry Average 27.S 23.2 10.3 8.9 1S.2 13.1 3S.2 34.3 (44.9) 2.2
nong kong department stores
A8kSCn 8L1AlL C8Cu L1u 3368 hk equlLy 10.06 19.9 17.2 4.4 4.4 11.4 9.9 23.3 24.3 (30.7) 2.0
CCLuLn LACLL 8L1AlL C8Cu 3308 hk equlLy 18.20 23.7 19.1 7.1 6.4 13.3 12.3 29.1 30.3 (47.9) 1.0
LllLS1?LL ln1L PLuCS L1u 1212 hk equlLy 17.96 18.2 13.8 3.9 3.6 13.4 11.3 21.1 21.4 (14.3) 2.1
ln1lML uLA81MLn1 S1C8L 1833 hk equlLy 9.24 18.2 14.4 2.3 2.4 14.9 11.9 13.6 13.8 26.2 2.0
S8lnCLAnu ln1L8nA1lCnAL PCL 1700 hk equlLy 4.86 17.2 14.1 2.6 2.4 9.7 7.9 13.3 16.1 (38.0) 2.3
MAC?L ln1L8nA1lCnAL PLuCS 848 hk equlLy 1.89 12.9 9.3 1.3 1.6 8.7 6.4 13.8 16.2 43.4 na
nLW WC8Lu uL1 S1C8L CPlnA 823 hk equlLy 4.86 12.8 10.3 1.3 1.4 3.3 2.9 16.3 12.7 (74.3) 3.3
Cu S1C8LS C8Cu L1u 331 hk equlLy 1.29 11.0 8.9 1.8 1.7 6.2 4.7 13.2 19.0 (12.9) 3.3
Industry Average 16.7 13.6 3.2 3.0 10.4 8.4 19.0 19.S (20.9) 2.3
Un|ted States Department Stores
MAC?'S lnC m us equlLy 33.86 12.8 10.9 2.6 2.3 6.0 3.8 16.6 20.9 107.8 1.0
!.C. LnnL? CC lnC [cp us equlLy 42.33 34.9 23.6 2.0 2.2 9.6 8.1 7.6 8.9 8.7 1.9
SAkS lnC sks us equlLy 10.88 28.4 22.2 1.3 1.7 7.6 6.8 4.3 7.1 26.3 na
kCPLS CC8 kss us equlLy 30.14 11.7 10.2 2.0 2.0 3.3 3.3 14.3 18.0 21.9 2.0
Industry Average 21.9 16.7 2.0 2.1 7.2 6.S 10.8 13.7 41.2 1.6
Austra||a Department Stores
uAvlu !CnLS L1u d[s au equlLy 2.32 9.3 9.2 1.6 1.7 3.7 3.4 22.0 18.2 13.3 13.9
M?L8 PCLulnCS L1u myr au equlLy 2.06 8.7 8.3 1.4 1.4 3.0 4.8 18.7 17.2 44.4 13.6
Industry Average 9.1 8.7 1.S 1.S S.3 S.1 20.3 17.7 29.8 1S.7
G|oba| Average 19.S 16.1 4.2 3.9 9.7 8.3 20.4 20.6 (2.2) 4.7
]L (x) ]8 (x) LV]L8I1DA kCL ()
See im
See important disclosures at the end of this publication



APPENDIX 1: DEPARTMENT STORE INDUSTRY OUTLOOK

Malaysias Economy
Malaysian economy grew at a CAGR of 17.2% from 2005 to 2008 prior to the global
financial crisis
GDP per capita grew at a CAGR of 15% from 2005 to 2008 from US$5,280 to US$8,036
Between 2011
and 6.4% respectively to reach US$331b and US$10,774 respectively in 2015

Malaysias Department Store Industry
The Malaysian department store retail market enjoyed robust double
12.3%, 29.6% and 13.2% in 2006
Slight decline of 3.1% in 2009 due to the global financial crisis
with a 10.7% growth
Between 20
The industry was valued at US$2.5b in 2010 and is projected to
between 2011 to 2015
PRA ranks number two in terms of retail value sales in 2010
Have forecasted SSSG of 7% annually for FY12
Figure 34: GDP and GDP per capita (2005
Source: Euromonitor International 2011


Figure 36: Market Share
Source: Euromonitor International 2011
* sales for Parkson includes only non
food products



See important disclosures at the end of this publication
See important disclosures at the end of this publication
APPENDIX 1: DEPARTMENT STORE INDUSTRY OUTLOOK
s Economy
Malaysian economy grew at a CAGR of 17.2% from 2005 to 2008 prior to the global
financial crisis
GDP per capita grew at a CAGR of 15% from 2005 to 2008 from US$5,280 to US$8,036
Between 2011-2015, GDP and GDP per capita are expected to grow at a CAGR of 7.9%
and 6.4% respectively to reach US$331b and US$10,774 respectively in 2015
s Department Store Industry
The Malaysian department store retail market enjoyed robust double
12.3%, 29.6% and 13.2% in 2006, 2007 and 2008
Slight decline of 3.1% in 2009 due to the global financial crisis
10.7% growth
Between 2005-2010, grew at a CAGR of 12.1%
The industry was valued at US$2.5b in 2010 and is projected to
ween 2011 to 2015
PRA ranks number two in terms of retail value sales in 2010
Have forecasted SSSG of 7% annually for FY12-FY14.
GDP and GDP per capita (2005-2015) Figure 35: Consumption expenditure & consumer
expenditure per capita (2005

Source: Euromonitor International 2011
Market Share
Euromonitor International 2011
* sales for Parkson includes only non-food sales product sales while others likely to include a m
43
19
17
7
3
3
3
2
3

26

DMG Research
OSK Research
OSK Research DMG Research
APPENDIX 1: DEPARTMENT STORE INDUSTRY OUTLOOK - MALAYSIA
Malaysian economy grew at a CAGR of 17.2% from 2005 to 2008 prior to the global
GDP per capita grew at a CAGR of 15% from 2005 to 2008 from US$5,280 to US$8,036
cted to grow at a CAGR of 7.9%
and 6.4% respectively to reach US$331b and US$10,774 respectively in 2015
The Malaysian department store retail market enjoyed robust double-digit growth of
Slight decline of 3.1% in 2009 due to the global financial crisis but rebounded in 2010
The industry was valued at US$2.5b in 2010 and is projected to grow at a CAGR of 4.5%
PRA ranks number two in terms of retail value sales in 2010
Consumption expenditure & consumer
expenditure per capita (2005-2015)
Euromonitor International 2011

food sales product sales while others likely to include a mix of food and non-
ALCn Co (M) 8hd
arkson Corp Sdn 8hd
1he SLore Corp 8hd
lseLan (M) Sdn 8hd
Mlllmewa SupersLore Sdn
8hd
8oblnson & Co LLd
See im
See important disclosures at the end of this publication



AEON Co which owns the Jusco chain of department stores is the leading player in the
Malaysian department store market. In terms of retail sales value in 2010 It held a 42.5%
market share compared to Parksons 19.2%.

Its other rival,
number of outlets in Malaysia
however isnt a direct competitor as it
the low to middle income consumers.

Figure 37: Number of outlets of top players
Source: Company data

In terms of number of outlets in Malaysia, Parkson ranks number two.

Figure 38: Selling space of top players
Source: Company data



313131
0
10
20
30
40
30
60
1he SLore
Corp 8hd
309
309
333
0
30
100
130
200
230
300
330
400
ALCn Co
(M) 8hd
Selling space ('000 sm)
See important disclosures at the end of this publication
See important disclosures at the end of this publication
AEON Co which owns the Jusco chain of department stores is the leading player in the
Malaysian department store market. In terms of retail sales value in 2010 It held a 42.5%
market share compared to Parksons 19.2%.
Its other rival, The Store which owns the Millimewa and The Store chain,
number of outlets in Malaysia but saw its market share declined by
isnt a direct competitor as it targets a different target market than
low to middle income consumers.
Number of outlets of top players
Company data
In terms of number of outlets in Malaysia, Parkson ranks number two.
Selling space of top players
Company data
32
21
17
7
3
36
21
17
7
3
31
36
23
17
7
3
1he SLore
Corp 8hd
arkson
Corp Sdn
8hd
ALCn Co
(M) 8hd
Mlllmewa
SupersLore
Sdn 8hd
MeLro[aya 8oblnson &
Co LLd
2008 2009
319
239
103
83
43
337
239
103
84
43
333
313
239
103
84
43
ALCn Co arkson
Corp Sdn
8hd
1he SLore
Corp 8hd
Mlllmewa
SupersLore
Sdn 8hd
MeLro[aya lseLan (M)
Sdn 8hd
Selling space ('000 sm)
2008 2009 2010

27

DMG Research
OSK Research
OSK Research DMG Research
AEON Co which owns the Jusco chain of department stores is the leading player in the
Malaysian department store market. In terms of retail sales value in 2010 It held a 42.5%
owns the Millimewa and The Store chain, has the most
saw its market share declined by 0.8% in 2010. The Store
targets a different target market than Parkson, serving

In terms of number of outlets in Malaysia, Parkson ranks number two.
3
2
28
3
2
28
3
2
32
lseLan (M)
Sdn 8hd
Sulwah
Corp 8hd
CLhers
2010
18
14
86
18 18
100
43
18 18
133
lseLan (M) 8oblnson &
Co LLd
Sulwah Corp
8hd
CLhers
2010
See im
See important disclosures at the end of this publication



APPENDIX 2: DEPARTMENT STORE INDUSTRY OUTLOOK

Vietnams Economy
Between 2011 to 2015, Vietnam is forecasted to experience GDP growth at a CAGR of
12.1% and GDP per capita growth of 11.2%
Consumer expenditure and expenditure per capita are
10.6% and 9.7% respectively between 2011 and 2015

Vietnams Department Store Industry
Vietnams
and 2008
During the global financial crisis in 2009, it
The industry was valued at US$355m in 2010 and is projected to grow at a CAGR of
9.1% between 2011 to 2015
Have forecasted SSSG of 9% for FY12
Figure 39: GDP and GDP per capita (2005
Source: Euromonitor International 2011


Figure 41: 2010 Market Share
Source: Euromonitor International 2011
* Sales for Parkson include only n
food products





See important disclosures at the end of this publication
See important disclosures at the end of this publication
: DEPARTMENT STORE INDUSTRY OUTLOOK
Vietnams Economy
Between 2011 to 2015, Vietnam is forecasted to experience GDP growth at a CAGR of
12.1% and GDP per capita growth of 11.2%
Consumer expenditure and expenditure per capita are forecast to grow at a CAGR of
10.6% and 9.7% respectively between 2011 and 2015
Vietnams Department Store Industry
Vietnams department store retail sales value grew by a CAGR of 22.5% between 2005

During the global financial crisis in 2009, it grew by 9.9% and a further 5.8% in 2010
The industry was valued at US$355m in 2010 and is projected to grow at a CAGR of
between 2011 to 2015
Have forecasted SSSG of 9% for FY12-14
GDP and GDP per capita (2005-2015) Figure 40: Consumption expenditure & consumer
expenditure per capita (2005

Source: Euromonitor International 2011
2010 Market Share
Euromonitor International 2011
* Sales for Parkson include only non-food sales product sales while others likely to include a mix of food and non
37
20
6
3
34

28

DMG Research
OSK Research
OSK Research DMG Research
: DEPARTMENT STORE INDUSTRY OUTLOOK - VIETNAM
Between 2011 to 2015, Vietnam is forecasted to experience GDP growth at a CAGR of
forecast to grow at a CAGR of
sales value grew by a CAGR of 22.5% between 2005
grew by 9.9% and a further 5.8% in 2010
The industry was valued at US$355m in 2010 and is projected to grow at a CAGR of
n expenditure & consumer
expenditure per capita (2005-2015)
Euromonitor International 2011

food sales product sales while others likely to include a mix of food and non-
arkson CorporaLlon
lnLernaLlonal 8uslness
CenLer Corp
Pasegawa vleLnam Co
1rang 1len laza Co LLd
CLhers
See im
See important disclosures at the end of this publication



Figure 42: Number of outlets of top players
Source: Company data

Figure 43: Selling space of top players
Source: Company data











3
6
0
3
10
13
20
23
30
arkson
CorporaLlon
86
111
0
20
40
60
80
100
120
140
160
180
200
arkson CorporaLlon
Selling space ('000 sm)
See important disclosures at the end of this publication
See important disclosures at the end of this publication
Number of outlets of top players
Company data
Selling space of top players
Company data
1 1
6
1 1
6
1 1
arkson
CorporaLlon
lnLernaLlonal
8uslness CenLer
Corp
Pasegawa vleLnam
Co
1rang 1len laza
2008 2009 2010
8
7
111
8
7
111
8
7
arkson CorporaLlon lnLernaLlonal 8uslness
CenLer Corp
Pasegawa vleLnam Co 1rang 1len laza Co LLd
Selling space ('000 sm)
2008 2009 2010

29

DMG Research
OSK Research
OSK Research DMG Research
1
23
1
24
1
26
1rang 1len laza
Co LLd
CLhers
12
130
12
134
12
183
1rang 1len laza Co LLd CLhers
See im
See important disclosures at the end of this publication



APPENDIX 3:

Indonesias Economy
Between 2005 to 2008, Indonesias GDP and GDP per capita grew at a CAGR of 21.3%
and 19.8% respectively
In 2010, it experience double digit GDP growth of 27.9% while GDP per capita grew at
26.5%
GDP and GDP per capita are expected to grow at a CAGR of 11.8% and 10.7% from
2011 to 2015
Consumer expenditure and expenditure per capita are forecast to grow at a CAGR of
11.0% and 10.0% respectively between 2011 and 2015

Indonesias Department S
Retail value sales are expected to grow at a CAGR of 10.7% between 2011 to 2015
Have assumed SSSG of 5% for FY12
still new to the market

Figure 44: GDP and GDP per capita (2005
Source: Euromonitor International 2011


Figure 46: Retail value sales market share of departmental store players
Source: Euromoni
* Sales for Parkson include only non
food products


2.30
2.30
0.40
0.20
See important disclosures at the end of this publication
See important disclosures at the end of this publication
APPENDIX 3: DEPARTMENT STORE INDUSTRY OUTLOOK
Indonesias Economy
Between 2005 to 2008, Indonesias GDP and GDP per capita grew at a CAGR of 21.3%
and 19.8% respectively
In 2010, it experience double digit GDP growth of 27.9% while GDP per capita grew at
GDP and GDP per capita are expected to grow at a CAGR of 11.8% and 10.7% from
2011 to 2015
Consumer expenditure and expenditure per capita are forecast to grow at a CAGR of
11.0% and 10.0% respectively between 2011 and 2015
Indonesias Department Store Industry
value sales are expected to grow at a CAGR of 10.7% between 2011 to 2015
Have assumed SSSG of 5% for FY12-14. Assumed rate appears conservative as PRA is
still new to the market
GDP and GDP per capita (2005-2015) Figure 45: Consumption expenditure & consumer
expenditure per capita (2005

Source: Euromonitor International 2011
Retail value sales market share of departmental store players
Euromonitor International 2011
* Sales for Parkson include only non-food sales product sales while others likely to include a mix of food and non
32.70
23.20
10.90
4.60
2.30
2.30
0.40
0.40
0.20
22.90

30

DMG Research
OSK Research
OSK Research DMG Research
DEPARTMENT STORE INDUSTRY OUTLOOK - INDONESIA
Between 2005 to 2008, Indonesias GDP and GDP per capita grew at a CAGR of 21.3%
In 2010, it experience double digit GDP growth of 27.9% while GDP per capita grew at
GDP and GDP per capita are expected to grow at a CAGR of 11.8% and 10.7% from
Consumer expenditure and expenditure per capita are forecast to grow at a CAGR of
value sales are expected to grow at a CAGR of 10.7% between 2011 to 2015
14. Assumed rate appears conservative as PRA is
Consumption expenditure & consumer
expenditure per capita (2005-2015)
Euromonitor International 2011
Retail value sales market share of departmental store players

food sales product sales while others likely to include a mix of food and non-
1 MaLaharl ueparLmenL
SLore 1bk
1 8amayana LesLarl
SenLosa 1bk
1 MlLra Adlperkasa 1bk
1 Akur raLama
1 MeLropollLan
8eLallmarL
1 1ozy SenLosa
1 Sarlnah (ersero)
1 Colden 8eLalllndo 1bk
1 8lmo Surabaya LesLarl
1bk
CLhers
See im
See important disclosures at the end of this publication



Dominated by two giants
giants PT Matahari Department Store Tbk (spun off from PT Matahari Putra Prima Tbk)
and PT Ramayana Lestari Sentosa Tbk.

PT Matahari Department Store Tbk (MDS) is expected to retain its top position (32.7%
market share in 2010). It plans to open 150 new stores wit
Generation stores targets the middle and high income consumers while Parksons recently
acquired Centro department stores target the middle income.

PRAs stores
Java Island while one is at Kuta Bali.

Figure 47: Number of outlets of top players
Source: Euromonitor International 2011

Figure 48: Selling space of top players
Source: Euromonitor International 2011




101
102
110
0
30
100
130
200
230
300
330
1 8amayana
LesLarl
SenLosa 1bk
312
323
366
0
200
400
600
800
1000
1200
PT
Ramayana
Lestari
Sentosa
Tbk
Selling space ('000sqm)
See important disclosures at the end of this publication
See important disclosures at the end of this publication
Dominated by two giants. Indonesias department store retail market is dominated by two
Matahari Department Store Tbk (spun off from PT Matahari Putra Prima Tbk)
and PT Ramayana Lestari Sentosa Tbk.
PT Matahari Department Store Tbk (MDS) is expected to retain its top position (32.7%
market share in 2010). It plans to open 150 new stores within a 10
Generation stores targets the middle and high income consumers while Parksons recently
acquired Centro department stores target the middle income.
held a 2.5% share of retail sales in 2010. Four out of the fi
sland while one is at Kuta Bali.
Number of outlets of top players
Euromonitor International 2011
Selling space of top players
Euromonitor International 2011
84
34
17
12
3 4
88
34
17
6 3
110
98
32
18
8
3
1 8amayana
LesLarl
SenLosa 1bk
1 MaLaharl
ueparLmenL
SLore 1bk
1 Akur
raLama
1 MlLra
Adlperkasa
1bk
1 Sarlnah
(ersero)
1 1ozy
SenLosa MeLropollLan
8eLallmarL
2008 2009 2010
423
210
136
49
66
40
441
210
136
49
33
40
366
491
224
136
49 44
Ramayana
PT Matahari
Department
Store Tbk
PT Mitra
Adiperkasa
Tbk
PT Akur
Pratama
PT
Metropolitan
Retailmart
PT Sarinah
(Persero)
PT Tozy
Sentosa
Selling space ('000sqm)
2008 2009 2010

31

DMG Research
OSK Research
OSK Research DMG Research
Indonesias department store retail market is dominated by two
Matahari Department Store Tbk (spun off from PT Matahari Putra Prima Tbk)
PT Matahari Department Store Tbk (MDS) is expected to retain its top position (32.7%
hin a 10-15 year period. Its New
Generation stores targets the middle and high income consumers while Parksons recently
held a 2.5% share of retail sales in 2010. Four out of the five are located on
4
7
2
299
4 3 2
313
4
2 2
308
1
MeLropollLan
8eLallmarL
1 8lmo
Surabaya
LesLarl 1bk
1 Colden
8eLalllndo
1bk
CLhers
2010
11
23
892
40
11 9
978
40
11
3
927
PT Tozy
Sentosa
PT Golden
Retailindo
Tbk
PT Rimo
Surabaya
Lestari Tbk
Others
See important disclosures at the end of this publication
32
See important disclosures at the end of this publication



DMG Research
OSK Research
OSK Research DMG Research
APPENDIX 4: MANAGEMENT PROFILE

Figure 49: Management Profile


Source: Company data















































Management Role
Datuk Cheng Yoong Choong Been with the Group since 1987
Group Managing Director Also the Group MD of PRGL listed on the Hong Kong Stock Exchange
Bachelor of Science in Business Administration and MBA from University of San Francisco
Mr Toh Peng Koon Also President Director of Indonesian operations
CEO of Malaysian operations Been with Group since 1988
Will oversee the operations and business strategy development of Group in Malaysia
Responsible for growth strategies for Indonesian operations
Mr Tham Tuck Choy Been with Group since 1987
CEO of Vietnamese & Responsible for establishing Group's operations in Vietnam
Cambodian operations Prior to PRA, was with retail group Emporium in Malaysia from 1975-1987
See important disclosures at the end of this publication
33
See important disclosures at the end of this publication



DMG Research
OSK Research
OSK Research DMG Research
FINANCIAL TABLES





Source: Company data and DMG estimates





Profit & Loss Statement
FYE Jun (S$m) FY10 FY11 FY12F FY13F FY14F
Revenue 333 367 474 565 682
COGS (140) (152) (194) (230) (274)
Gross Profit 193 216 280 335 408
Other income:
-Finance income 3 5 4 5 7
-Other income 3 6 4 5 5
Operating Expenses:
Employee benefits expense (35) (35) (45) (51) (61)
Depreciation & amortisation (15) (15) (15) (21) (26)
Promotional & advertising (5) (7) (9) (11) (13)
Rental expenses (67) (70) (90) (107) (128)
Finance costs (0) (1) (0) (0) (0)
Other expenses (43) (47) (62) (72) (86)
Total Expenses (167) (175) (221) (262) (315)
PBT 33 52 68 82 104
Tax (10) (16) (21) (26) (32)
PAT 22 36 47 57 72
MI (1) (1) (1) (1) (2)
PATMI 21 35 46 55 70
EBIT 29 47 73 88 111
EBITDA 45 62 88 108 137
Balance Sheet
FYE Jun (S$m) FY10 FY11 FY12F FY13F FY14F
Cash and cash equivalents 127 96 108 127 167
Trade and other receivables 18 24 31 37 45
Inventories 47 52 67 79 95
Others 0 1 1 1 1
Current assets 192 173 208 245 308
Property, plant and equipment 74 70 96 120 134
Intangible assets 0 7 6 6 6
Others 28 36 40 44 48
Non-current assets 101 113 143 170 188
Total assets 294 286 350 415 496
Trade and other payables 125 125 160 190 226
ST Borrowings 0 1 1 1 1
Others 21 29 30 32 33
Current liabilities 146 154 191 223 260
LT Borrowings 0 0 0 0 0
Deferred tax 1 0 0 0 0
Others 4 5 5 5 5
Non-current liabiilities 5 5 5 5 5
Total liabilities 151 159 196 228 265
Share capital 21 159 159 159 159
Reserves 1 -133 -131 -128 -124
Retained profits 118 97 122 153 191
Shareholder's Equity 140 123 151 184 227
MI 3 4 4 4 4
Total equity 143 127 154 188 230
Cash Flow
FYE Jun (S$m) FY10 FY11 FY12F FY13F FY14F
PBT 33 52 68 82 104
Depreciation & non Cash Adj 20 14 11 16 20
Change in working capital 20 2 13 11 14
Interest income 3 4 4 5 7
Interest expense 0 0 0 0 0
Tax -8 -16 -21 -26 -32
CFO 67 55 75 89 112
Capex -26 -10 -41 -45 -40
Other Investing CF 0 3 0 0 0
CFI -26 -6 -41 -45 -40
Dividends 0 -56 -21 -25 -32
Other Financing CF 1 -15 0 0 0
CFF 1 -71 -21 -25 -32
Free cash flow 41 46 34 44 72
See important disclosures at the end of this publication
34
See important disclosures at the end of this publication



DMG Research
OSK Research
OSK Research DMG Research
DMG & Partners Research Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage

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investment objectives, financial situation and particular needs of any specific recipient of this research report. You should independently evaluate
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The information contained herein has been obtained from sources we believed to be reliable but we do not make any representation or warranty
nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions and views expressed in this report are subject to
change without notice.

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DMG & Partners Research Pte Ltd is a wholly owned subsidiary of DMG & Partners Securities Pte Ltd, a joint venture between OSK Investment
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have proprietary positions in the subject companies, except for:
a) Nil
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As of the day before 9 February 2012, none of the analysts who covered the stock in this report has an interest in the subject companies covered
in this report, except for:
Analyst Company
a) Nil
b) Nil


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