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Saturday, March 10, 2012

Parkson plans RM3b chain of shopping malls in China

KUALA LUMPUR: Parkson Holdings Bhd, a Lion group company, will invest some RM3 billion to develop a chain of 10 shopping complexes by 2020.

The development and management of the mall, which will be under Festival City Sdn Bhd, will open in major cities within the country and carry the Festival City brandname.

Group managing director Datuk Alfred Cheng this is a natural extension of its enormous retail experience and to create a new and steady source of income.

“Parkson is in its 25th year of operations and has a lot of retail experience. In some of our overseas operations where we occupy a larger area, we are already operating a ‘pseudo’ shopping malls.

So, we already have experience running malls and this is a natural extension,” he said.

Cheng explained that it used the word “pseudo” as it already has seven malls in China where Parkson is the main occupant with smaller retailers.

“The focus (previously) was to build a network of Parkson (department store). Now that we have achieved more than 105 stores in Asia, we feel ready to also venture into shopping complexes,” he said.

“Within the next three years, we expect to have two more malls and, within 10 years, 10 malls in total in Malaysia,” he said.

In a recent interview, it was reported that Parkson was finalising a second mall that will be located in Malacca.

“Each mall will cost between RM250 million and RM300 million on the average or maybe even a little more,” Cheng told Business Times following the official launch of the first mall.

“We will only be in major cities for a start,” he added.

Cheng also did not discount the fact that it could buy an existing mall but said that it would focus on developing its own mall.

Parkson Holdings is the majority shareholder in both Hong Kong-listed Parkson Retail Group Ltd and Singapore-listed Parkson Retail Asia.

The former listed entity covers the retail operations in China, while the latter covers operations in Malaysia, Vietnam and Indonesia.

Meanwhile, Cheng said KL Festival City will post a earnings before tax and interest of RM20 million in the first year of operations. The mall's tenants are expected to rake in a total of RM300 million in sales in during the same period.

KL Festival City, whose theme is "Every Day is a Celebration", is a 1.1 million-sq-ft mall with a total net lettable area of 500,000 sq ft.

Shares of Parkson Holdings yesterday rose 3 sen to close at RM5.56. The stock's price has fallen by 1.77 per cent so far this year, compared with the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index's 3.15 per cent rise.

By Business Times

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