KUALA LUMPUR: Parkson Holdings Bhd is divesting a 70% stake in its wholly-owned hire purchase unit, Parkson Credit Sdn Bhd, to Hong Kong-listed subsidiary Parkson Retail Group Ltd for RM49 million.
In a filing with Bursa Malaysia yesterday, Parkson Holdings said its wholly-owned subsidiary Parkson Credit Holdings Sdn Bhd has entered into a sale and purchase agreement to dispose of a 70% stake in Parkson Credit, to Parkson Retail’s wholly-owned subsidiary Oroleon (HK) Ltd.
Parkson Holdings owns a 54.97% stake in Parkson Retail.
According to Parkson Retail’s filing with the Hong Kong Stock Exchange, the purchase price was arrived at after taking into account Parkson Credit’s earnings for the financial year ended June 30, 2017 (FY17) and FY18.
Parkson Credit posted a profit after tax of RM9.01 million for FY18 and RM5.8 million for FY17.
Parkson Retail appointed a business valuer, whose valuation report found Parkson Credit worth RM74.96 million as at March 31 this year, according to the filing.
“The purchase price represents a discount of approximately 7% to the valuation of the sale shares. The group intends to finance the purchase price by way of bank borrowings,” said Parkson Retail.
Based on the price tag of RM49 million, the deal values Parkson Credit at a price-earnings ratio (PER) of 7.8 times. For comparison with the credit service companies listed on Bursa Malaysia, AEON Credit (M) Bhd was trading at a historical PER of 11.38 times, while ELK-Desa Resources Bhd’s historical PER was 11.28 times.
Parkson Credit’s principal business is provision of Islamic and conventional hire purchase or credit sale scheme for consumer durables and motorcycles in Malaysia through authorised dealers.
Parkson Retail said it is confident that after its acquisition, Parkson Credit can contribute instant income and profit.
“The acquisition will also allow the group to expand into a new business, namely provision of credit services such as consumer financing and hire purchase financing which are in high demand in Malaysia,” it said.