Parkson Retail's net profit to fall 19.4% to RMB906mn

Here are other threats to its growth in 2013.

Parkson schedules to announce its 2012 results after market close on 22 February 22. Nomura expects Parskon’s net profit to decline 19.4% y-y to RMB906mn in 2012, 2.1% below Bloomberg consensus of RMB926mn. 

Here's more from Nomura:

Our forecast implies net profit of RMB233mn for 4Q12, representing a 16.9% y-y decline, improving from a 42.3% y-y decline for 3Q12 due to profit contribution from acquired stores in 4Q12 and improving SSSG from -1% to the low single digits. We forecast net profit growth to accelerate to 12.1% y-y in 2013 due to: 1) full-year earnings contribution of acquired stores;

2) improving SSSG on younger store age for comparable stores and a better macroeconomic situation; and 3) less loss from new stores due to a slower expansion plan. 

Despite expecting the company to resume growth in 2013, we think the structural problems for both the department store industry and the company could limit a valuation re-rating, including: 1) ongoing threats of e-commerce to traditional department stores;

2) weakening competitive edge relative to its peers due to older store portfolio, smaller average size per store and lack of core markets with strong bargaining power.