ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

Think this does not seems well to the company

Ok, it's official Parkson Retail Asia is worth <0 (adjusted for cash)

Market cap based on last trade: 115m SGD
Net Cash (as per last report): 120m SGD

It's a troubled business, but what exactly is happening? Surely their 60 stores in Malaysia/Vietnam/Indo/Myanmar are not worth 0!?

(18-02-2016, 03:54 PM)frus Wrote: [ -> ]Ok, it's official Parkson Retail Asia is worth <0 (adjusted for cash)

Market cap based on last trade: 115m SGD
Net Cash (as per last report): 120m SGD

It's a troubled business, but what exactly is happening? Surely their 60 stores in Malaysia/Vietnam/Indo/Myanmar are not worth 0!?

Sometimes a controlling shareholder has a lousy corporate governance track record so the mkt assigned a big discount to valuation.

e.g. got cash oneself keep. dont share with others.

(18-02-2016, 03:54 PM)frus Wrote: [ -> ]Ok, it's official Parkson Retail Asia is worth <0 (adjusted for cash)

Market cap based on last trade: 115m SGD
Net Cash (as per last report): 120m SGD

It's a troubled business, but what exactly is happening? Surely their 60 stores in Malaysia/Vietnam/Indo/Myanmar are not worth 0!?

In retail biz model, the leverage isn't on bank debt, but on suppliers' "debt". A quick check on 1H report.

Net Cash 107 mil vs supplier "debt" of 81 mil with Payables 184 mil, Receivables is 39 mil, and Inventories 64 mil. Please bear in mind that, no discount usually for payables, but write-down is possible for inventories, and receivables

(not vested, but share a quick view)

(18-02-2016, 08:27 PM)CityFarmer Wrote: [ -> ]

(18-02-2016, 03:54 PM)frus Wrote: [ -> ]Ok, it's official Parkson Retail Asia is worth <0 (adjusted for cash)

Market cap based on last trade: 115m SGD
Net Cash (as per last report): 120m SGD

It's a troubled business, but what exactly is happening? Surely their 60 stores in Malaysia/Vietnam/Indo/Myanmar are not worth 0!?

In retail biz model, the leverage isn't on bank debt, but on suppliers' "debt". A quick check on 1H report.

Net Cash 107 mil vs supplier "debt" of 81 mil with Payables 184 mil, Receivables is 39 mil, and Inventories 64 mil. Please bear in mind that, no discount usually for payables, but write-down is possible for inventories, and receivables

(not vested, but share a quick view)

CF, where and what actually is the supplier debt of 81 mio in The balance sheet?

Thanks.

But still,

I believe it might be under-valued despite its many problems.

They have a record of paying dividends, to pay 2 cents they need to pay about 13 mio.

While core operating NP might be a challenge to hit 13 mio, looking at FCF it seems like not a problem


If u cut it further down to 1 cent dividend of 6.7 mio, it's still above 5% yield.

It seems punishing valuation for a still profitable company generating good cash flow

(Not vested but watching)

(18-02-2016, 08:39 PM)Greenrookie Wrote: [ -> ]

(18-02-2016, 08:27 PM)CityFarmer Wrote: [ -> ]

(18-02-2016, 03:54 PM)frus Wrote: [ -> ]Ok, it's official Parkson Retail Asia is worth <0 (adjusted for cash)

Market cap based on last trade: 115m SGD
Net Cash (as per last report): 120m SGD

It's a troubled business, but what exactly is happening? Surely their 60 stores in Malaysia/Vietnam/Indo/Myanmar are not worth 0!?

In retail biz model, the leverage isn't on bank debt, but on suppliers' "debt". A quick check on 1H report.

Net Cash 107 mil vs supplier "debt" of 81 mil with Payables 184 mil, Receivables is 39 mil, and Inventories 64 mil. Please bear in mind that, no discount usually for payables, but write-down is possible for inventories, and receivables

(not vested, but share a quick view)

CF, where and what actually is the supplier debt of 81 mio in The balance sheet?

Thanks.

I should use the proper term, it is the negative working capital been leveraged by the company

WC = Receivable + Inventory - Payable = 39 + 64 - 184 = -81 mil

(I rounded all numbers. It is not accuracy counts, but the concept)

(18-02-2016, 09:16 PM)CityFarmer Wrote: [ -> ]

(18-02-2016, 08:39 PM)Greenrookie Wrote: [ -> ]

(18-02-2016, 08:27 PM)CityFarmer Wrote: [ -> ]

(18-02-2016, 03:54 PM)frus Wrote: [ -> ]Ok, it's official Parkson Retail Asia is worth <0 (adjusted for cash)

Market cap based on last trade: 115m SGD
Net Cash (as per last report): 120m SGD

It's a troubled business, but what exactly is happening? Surely their 60 stores in Malaysia/Vietnam/Indo/Myanmar are not worth 0!?

In retail biz model, the leverage isn't on bank debt, but on suppliers' "debt". A quick check on 1H report.

Net Cash 107 mil vs supplier "debt" of 81 mil with Payables 184 mil, Receivables is 39 mil, and Inventories 64 mil. Please bear in mind that, no discount usually for payables, but write-down is possible for inventories, and receivables

(not vested, but share a quick view)

CF, where and what actually is the supplier debt of 81 mio in The balance sheet?

Thanks.

I should use the proper term, it is the negative working capital been leveraged by the company

WC = Receivable + Inventory - Payable = 39 + 64 - 184 = -81 mil

(I rounded all numbers. It is not accuracy counts, but the concept)

Yup thanks! I am not number crazy, concept far more important

When calculating cash flow, I tend to use OCF before WC - taxes - Capex as a gauge. This is because working capital can be lumpy. From this basis, based on last FY or extrapolating this 6 months result, business is negative cash flow generating/barely able to support its high dividends (or even 1 cents).

I guess CF is saying that Payables-Receivables-Inventories=81m. ie the payables are debt.

Yes, that's right, although most people would call it working capital and excluded from the net debt calculation. Except for a liquidation scenario (which is not in question as far as I know) that doesn't matter too much, but good point!