KUALA LUMPUR (June 6): Parkson Holdings Bhd (KL:PARKSON) said two of its units in mainland China have renewed their respective  tenancy for another 10 years until December 2034.

In a filing with Bursa Malaysia on Thursday, Parkson said Shenyang Parkson Shopping Plaza Co Ltd has entered into a supplemental tenancy agreement with Shenyang Holding Co Ltd in Heping District, Shenyang. 

Meanwhile, Parkson Retail Development Co Ltd (Beijing Parkson) has signed a similar agreement with Harbin International Co Ltd for its tenancy in Daoli District, Harbin.

“Shenyang and Harbin are both important provincial capital cities in Northeast China in which enterprises establish their business operations,” said Parkson, adding that the existing stores will continue to generate stable revenue and maintain their market recognition in China.

Shenyang Parkson and Beijing Parkson are indirect wholly-owned subsidiaries of Hong Kong-listed Parkson Retail Group Ltd (PRGL), which is in turn a 54.97%-owned subsidiary of Parkson.

The supplemental agreements are recognised as assets acquisitions as per listing rules of the Hong Kong Stock Exchange, said Parkson, adding that the acquisition of assets recognised by the PRGL Group are RM97.7 million for the Shenyang property and RM100.3 million for the Harbin property.

The group said the agreements will not have a material impact on its earnings and net assets for the financial year ending Dec 31, 2024 (FY2024).

As of March 31, Parkson operated 42 stores in 28 cities across China.

For the first quarter ended March 31, 2024, Parkson’s retail division in China saw its revenue decline 3% year-on-year to RM599.09 million from RM618.56 million, which it attributed to “a more rational consumer behaviour after the Covid-19 pandemic.”

Nevertheless, operating profit rose 41% to RM81.39 million from RM57.58 million, on the back of operating efficiencies, cost control measures and additional rental income.

At the group level, quarterly net profit was up 27.2% year-on-year to RM26.31 million from RM20.68 million, mainly due to higher footfall and cost control measures. Revenue rose 1.1% to RM845.08 million from RM835.65 million.

Shares of Parkson closed unchanged at 29.5 sen on Thursday, valuing the group at RM344.98 million.