Chinese Jam Parkson's Aisles Investors Are Bullish About the Prospects
For Department Stores
By MEI FONG
November 3, 2006; Page C12
BEIJING -- In the U.S. and Europe, department stores are losing ground to specialty stores and giant discounters such as Wal-Mart Stores -- but not in China.
The world's fastest-growing economy has just 1.75 department stores per million people -- a fraction of the comparable figures in Western countries. That fact, along with booming retail-sales figures, is making investors bullish about the prospects for department stores in China.
One favorite is Parkson Retail Group -- China's answer to U.S.-based Federated Department Stores' Macy's chain and Selfridges of the U.K. -- with its offerings of designer-branded clothing, cosmetics and groceries.
The Malaysian-owned, Hong Kong-listed company is one of the few department-store chains in China with a nationwide presence: 40 stores in 28 cities and annual sales in excess of US$1 billion. The share price has more than tripled since the company's initial public offering in November 2005 at 9.80 Hong Kong dollars (US$1.26), closing yesterday at HK$30.85. In August, the company said its first-half net profit nearly doubled to 196.2 million yuan ($24.9 million).
"Parkson is one of the core holdings for China investors," says Candy Huang, Shanghai-based analyst at BNP Paribas Peregrine, who has a buy rating on the stock. Parkson announced Wednesday that it plans a $200 million bond issue to fund a major expansion. Parkson previously announced plans to open four or five stores in China yearly and acquire one or two stores.
The bond issue will increase the company's cash position to about three billion yuan, giving it money to buy out its minority partners in several stores. Regulatory changes have eliminated a requirement that foreign retailers must have Chinese partners, and such deals give retailers stronger management and brand control. Also, these acquisitions are usually priced inexpensively because few other parties are interested in minority stakes, analysts say.
Parkson declined to comment, citing the pending bond issue.
Chinese shopping patterns are still evolving. At the moment, they correspond roughly to U.S. shopping habits in the 1970s, when Americans started moving away from "mom and pop" stores to department stores, but before large discount stores and malls gained overwhelming popularity.
According to a September report by Macquarie Research Equities, the department-store format in China is expected to experience 14% annual sales growth until 2010. Department stores also are expected to gain an increasing share of China's retail sales, growing from 10% to 17% and taking share from other types of stores, such as specialty shops and supermarkets.
This is because department stores are targeted at China's growing middle and upper-middle classes -- and hence are more shielded from margin pressures and price wars for more price-conscious consumers, say analysts.
Parkson, for example, over the years has upgraded its product mix. Its demographics and established-store network are expected to attract some foreign brands that are looking to enter China.
Xiaopo Wei, an analyst at Macquarie, says he thinks this expansion could increase risks and competition and squeeze profit margins. Mr. Wei forecasts net margin will decline to 18% in 2008 and maintains a neutral rating on the stock.
Other analysts say they like the company but think the stock is too expensive. In June, Brenda Lee at Shanghai-based brokerage Daiwa Institute of Research lowered her rating to hold from buy. "Most of the good news has already been factored in the share price," she said. Ms. Lee said she expected growth momentum to slow.
Still, Parkson seems to have confounded some of its critics. At yesterday's closing price of HK$30.85, the share price already is above some analysts' forecasts. CLSA Asia-Pacific Markets put a sell rating on the stock in June, when it was trading at HK$20.80, saying increased competition and new acquisitions could dent profitability.
CLSA now concedes its rating didn't adequately take into consideration Parkson's potential inexpensive store acquisitions or its purchase of minority stakes in existing stores. It says it will reconsider its rating soon.
Yesterday's Market Activity
European shares ended lower as markets succumbed to a bout of profit taking after a weak start on Wall Street, mixed earnings reports and a hint by the European Central Bank that it will boost interest rates at its next meeting.
Hong Kong's leading share index powered to its second record close this week while Tokyo's Nikkei Stock Average of 225 companies softened over renewed concerns over the pace of growth in the U.S. economy. The Tokyo market will be closed today for Culture Day.
In LONDON, out-of-favor defensive stocks including food producer Unilever and drug makers AstraZeneca and GlaxoSmithKline helped the FTSE 100 index close virtually flat in the face of downbeat U.S. economic data.
In HONG KONG, the Hang Seng Index rose 1.4%, to 18714.78, on gains by HSBC Holding, up 1%, and China Mobile, up 3.7%.
百盛集团见证中国百货业繁荣
2006年11月03日13:25英 | 大 | 中 | 小
在美国和欧洲，百货商店在专卖店和沃尔玛连锁公司(Wal-Mart Stores)这样的折扣店巨头面前步步退缩，但在中国却不是这种情况。
在这个全球经济增长最快的国家，每百万人仅拥有1.75家百货商店，只是西方国家的零头。这种现状，以及零售额的攀升使投资者看好中国百货商店的前景。
百盛商业集团有限公司(Parkson Retail Group Ltd., 简称：百盛集团)就是被看好的一家。它类似于美国Federated Department Stores旗下的Macy's连锁店和英国的Selfridges，主要销售品牌服装、化妆品和杂货。
这家马来西亚人拥有的香港上市公司是为数不多几家进军中国众多地区的百货连锁店之一，它共在28个城市开设了40家商店，年销售额超过10亿美元。自该公司2005年11月以9.80港元的价格首次公开募股以来，其股价已经上涨了两倍多，周四收于30.85港元。今年8月份，百盛集团表示上半年的净利润几乎增长了一倍，达到人民币1.962亿元（2,490万美元）。
法国巴黎百富勤融资有限公司(BNP Paribas Peregrine)驻上海分析师Candy Huang说，百盛集团是中国投资者的核心持股之一。她对该股的评级为买进。她指出，百盛集团拥有经验丰富的管理团队以及通过开设新店和收购旧店实现增长的良好经历。
在周三宣布计划发行2亿美元债券，为大举扩张筹集资金后，百盛集团有望加速增长。该公司此前曾宣布，计划每年在中国开设4至5家新店，收购一、两家现有商店。
此次债券发行将使百盛集团的现金头寸增加到人民币30亿元左右，从而能够全部收购其几家商店中被合作伙伴持有的少数股权。宜家(Ikea International)和星巴克(Starbucks)等在华零售商也越来越多地采取这种做法，因为监管机构已经取消了要求海外零售商必须拥有中国合作伙伴的规定。
这类交易一般都会被投资者看好，因为收购能使零售商更好地实施管理和品牌控制。而且，分析师称，这些收购通常定价较低，因为合资伙伴一般都对少数股份不感兴趣。
百盛集团以即将发行债券为由对此不予置评。
中国人的购物方式仍在不断演变。目前，他们沿袭的基本是美国上世纪70年代时的购物习惯，当时美国人刚刚开始从“夫妻店”转向百货商店，但大型折扣商店和购物中心还未占据主导地位。
根据Macquarie Research Equities 9月份发表的研究报告，中国的百货商店业在2010年前的年增长率预计将达到14%。预计百货商店在中国零售额中所占的比例也将增加，从目前的10%上升到17%，而专卖店和超市等其它类型的商店所占的比例将有所下降。
分析师称，这是因为百货商店主要面向中国不断增长的中产和中上层人士，因此来自价格敏感型消费者的利润率和价格战压力更小。
比如，百盛集团多年来不断升级其产品组合，从佐丹奴国际(Giordano International)等低价服装品牌转向了Phillips-Van Heusen的卡尔文?克莱(Calvin Klein)等品牌。它的消费群体和现有的商店网络预计将吸引部分希望进入中国、但还没有能力自建分销渠道的海外品牌。
并非所有分析师都看好百盛集团雄心勃勃的扩张计划。Macquarie的分析师魏晓坡说，他认为扩张将增加风险和竞争，并导致利润率下降。魏晓坡预计，百盛集团2008年的净利润率将从2005年的20%下降到18%，他对该股的评级为中性。
也有分析师表示，他们看好这家公司，但认为其股价过高。
今年6月份，经纪机构大和研究所(Daiwa Institute of Research)驻上海的分析师Brenda Lee将她对该股的评级从买进下调到持有。她说，多数好消息已经为股价所消化。她预计该股的增长势头将减缓。
不过，百盛集团看来已经用事实反驳了一些批评意见。周四30.85港元的收盘价已经超出了部分分析师的预期。里昂证券亚太区市场(CLSA Asia-Pacific Markets)今年6月份对该股的评级为卖出，称竞争压力不断加大以及新的收购可能损害其盈利能力。当时该股的股价为20.80港元。
里昂证券现在承认它的评级并没有充分考虑百盛集团可以低价收购商店或收购现有商店的少数股份。里昂证券表示，很快将重新考虑评级。
Mei Fong
