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Parkson Retail Asia is a Malaysian department store chain that looks like a dying dinosaur to some people.
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It’s not about growth; its revenue is stagnating, and it's not a specialty store like Uniqlo that attracts crowds.
It’s about trimming the fat.
Management has been aggressively cutting costs since 2017 by exiting bleeding markets like Vietnam, Indonesia, and Myanmar, shrinking their footprint down to just 39 stores solely in Malaysia.
On top of that, they used the COVID-19 pandemic to renegotiate leases, severely dropping their rent expenses.
The result -- Parkson has actually maintained solid, but declining, profits since 2022 (table below).
|
Item |
FY21 (18 mths) |
FY22 |
FY23 |
FY24 |
FY25 |
|
Revenue |
248,411 |
230,838 |
221,584 |
214,812 |
208,312 |
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EBITDA |
131,392 |
104,128 |
89,256 |
87,566 |
80,813 |
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Net (loss)/profit attributable to owners |
13,730 |
28,755 |
25,197 |
24,123 |
20,878 |
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Earnings per share (cent) |
2.04 |
4.27 |
3.74 |
3.58 |
3.10 |
| Insane Valuation? |
Because the market only sees a dying department store, the valuation is kind of cheap.
We are talking about a company generating >S$20 million in annual net profit over the last three years, and trades at a PE ratio of around 4!
| Low remuneration |
 The Executive Directors—Tan Sri Cheng Heng Jem (Executive Chairman) and his daughter, Vivien Cheng —do not receive a traditional salary, bonus, or benefits . Instead, their compensation consists entirely of basic Directors' fees, which amounted to S$35,000 each for FY2025. |
Even better, they have minimal borrowings.
Instead of burning cash, Parkson is hoarding it, growing its cash pile from S$62 million to a massive S$120 million by the end of 2025.
It surged to S$169 million in 1Q2026, "mainly due to higher cash collections in line with the festive seasons during the period," according to Parkson.
(However, a large portion of that cash is owed to third−party concessionaires -- these are third-party brands or operators that sell their goods inside the department store under a concession arrangement. Parkson's current trade and other payables ballooned to S$131.2 million from S$100 million).
Its market cap (stock price: 12 cents) is only sitting at about S$81 million.
The investment thesis goes from mildly interesting to potential money-maker when "Fair Value" argues that the main reason to buy this stock is the reinstatement of dividends.
After nearly 10 years of zero payouts, Parkson paid a special interim dividend of 4 cents/share in June 2025 and 2 cents/share in June 2026. That's a nice 16.7% trailing yield.
But it does not have a dividend policy, so the risk is that the payouts become erratic or stop.
Executive Chairman Tan Sri Cheng Heng Jem, who is also chairman of the Lion Group Malaysia conglomerate, holds a total interest of ~68% in Parkson.
To "Fair Value", this is not a "buy and hold forever" kind of stock. |
→ See also:HL GLOBAL: Hidden Value in A Highland of Malaysia. Could It Also be a Value Trap
