Wednesday, 14 February 2018

(The Star) ‘Neutral’ call on Parkson kept after settlement deal

PETALING JAYA: PublicInvest Research is retaining its “neutral” call on Parkson Holdings Bhd with an unchanged target price of 75 sen.

It said in a report that Parkson had announced a settlement agreement in relation to two litigations from a long-time dispute regarding store ownership and entitlement to profits.

The settlement agreement was between its unit Serbadagang Holdings Sdn Bhd and five companies – Dalian Tianhe Building Co Ltd, Hefei Parkson Xiaoyao Plaza Co Ltd, Shenzhen Xinhui Industrial Co Ltd, Dalian Tianhe Parkson Shopping Mall Co Ltd and Dashang Group Co Ltd.

“We view the agreement positively as Parkson is expected to record a net gain of RM25mil, which will contribute to its financial year 2018 earnings. This will also be in addition to further compensation to be negotiated by end-June 2018,” it said.

PublicInvest said there were two litigations. The first was the Hefei Parkson Litigation, involving DT Building and Hefei Parkson in relation to a disputed ownership of the 51% equity interest in Anshan Tianxing Parkson Shopping Centre Co Ltd.

The second was Serbadagang litigations, involving the DT Building and Serbadagang in relation to Serbadagang’s claims for its entitlement to the profits of Dalian Tianhe Parkson and a department store of Dalian Tianhe Parkson in Shenyang, China.

The settlement agreement and compensation agreement entail that Hefei Parkson will pay the relevant dividends to Serbadagang as compensation.

For now, Hefei Parkson will pay 100 million yuan to Serbadagang by April 30, and the two parties will further negotiate on a possible additional compensation, which should be in a legally binding agreement by June 30.