21 February 2017 | 2QFY17 Results Review
Upgrade to BUY
Padini Holdings Berhad
(previously NEUTRAL)
Revised Target Price (TP): RM2.98
Strong second quarter performance
(Previously RM2.81)
INVESTMENT HIGHLIGHTS
● 2QFY17 earnings rose by +64.7%yoy to RM54.5m
RETURN STATS
● Revenue increased by +25.3%yoy to RM426.6m due to
positive SSSG and opening of new stores
Price (20th February 2017)
RM2.58
● Gross profit and net profit margin improved
Target Price
RM2.98
Expected Share Price Return
+15.5%
Expected Dividend Yield
+4.7%
● Third interim dividend for FY17 of 2.5sen was declared
● Upgrade to BUY with a revised TP of RM2.98 based on a
PER18 of 11.0x
Earnings above expectation. Padini Holdings Berhad’s 2QFY17
Expected Total Return
+20.2%
earnings rose by +90.5%qoq and +64.7%yoy to RM54.5m. With the
stronger-than-expected 2Q performance, 6MFY17 cumulative earnings
outpaced our and consensus full year FY17 expectations, accounting for
STOCK INFO
56.6% and 55.7% of full year forecasts respectively. Historically, the
company’s 2H earnings (January to June) is the strongest compared
KLCI
1712.58
with its 1H earnings.
Bursa / Bloomberg
7052 / PAD MK
2QFY17 revenue increased by +25.3%yoy. Revenue for 2QFY17
Board / Sector
Main/ Consumer
increased by +25.3%yoy to RM426.6m mainly attributable to the
positive same store sales growth (SSSG) coupled with the eight Brands
Syariah Compliant
Yes
Outlet stores and five Padini Concept stores that were in operation after
Issued shares (mil)
657.9
Par Value (RM)
0.10
the end of the comparative quarter of prior financial year i.e. 2QFY16.
Gross profit and net profit margin improved.
The gross profit
margin for the period increased by +1.9ppts from 39.9% in 2QFY16 to
Market cap. (RM’m)
41.8% due to the lesser mark downs during the quarter. Thus, the
Price over NA
1,697.4
3.52x
gross profit grew by +31.3%yoy to RM178.5m in 2QFY17. In addition,
net profit margin improved by +3.1ppts from 9.7% in 2QFY17 to
52-wk price Range
RM1.91–RM3.08
12.8% which was mainly due to better operating efficiency as the
Beta (against KLCI)
0.52
higher revenue growth rate.
3-mth Avg Daily Vol
1.46m
Third interim dividend declared. A third interim single-tier dividend
3-mth Avg Daily Value
RM3.65
of 2.5sen per share was declared for FY17. The cumulative dividends
Major Shareholders (%)
group managed to suppress growth in operating expenses against a
declared per share for FY17 is 7.5sen per share.
Yong Pang Chaun Hldgs
43.74
+8.63% and +6.06% respectively. Our bullish earnings is premised on:
Thian Min Yang
2.90
(i) Better performance expected in 3Q and 4Q as seasonally both are
FMR LLC
2.45
Earning revision. We are revising our FY17F and FY18F earnings by
strong quarters for the group and on; (ii) Improvements in operational
efficiency due to better cost management.
MIDF RESEARCH is a unit of MIDF AMANAH INVESTMENT BANK
Kindly refer to the last page of this publication for important disclosures
MIDF RESEARCH
Tuesday, 21 February 2017
Prospect. Padini managed to conclude a commendable result in 1HFY17 despite the prevailing challenges of unstable
Ringgit, rising costs of goods and operations. Historically, 3Q (January-March) and 4Q (April-June) results are
seasonally stronger, driven primarily by Chinese New Year and Hari Raya Puasa celebrations. We are expecting this
trend to continue in the second half of FY17. Moreover, earlier celebration of Hari Raya Puasa (25 June 2017) in FY17
will help boost Q4 earnings.
Upgrade to BUY with a revised TP of RM2.98. We upgrade our recommendation to BUY on Padini with a revised
TP of RM2.98 (previously RM2.81 per share). Our valuation is based on EPS18 of 27.1sen against the company’s
two-year average PER of 11x.
INVESTMENT STATISTICS
FYE June (RMm)
FY2014
FY2015
FY2016
FY2017F
FY2018F
Revenue
866.3
977.9
1,301.2
1,532.8
1,732.1
Gross profit
400.0
422.2
542.6
640.7
729.2
Operating profit
127.9
114.7
190.4
215.5
244.2
PBT
125.7
111.8
186.7
215.5
244.2
PAT
90.9
80.2
137.4
159.5
178.3
EPS (sen)
13.8
12.2
20.9
24.2
27.1
Net Dividend (sen)
11.5
10.0
11.5
12.0
12.5
Gross profit margin (%)
46.2
43.2
41.7
41.8
42.1
Operating profit margin (%)
14.8
11.7
14.6
14.1
14.1
PBT margin (%)
14.5
11.4
14.3
14.1
14.1
PAT margin (%)
10.5
8.2
10.6
10.4
10.3
Dividend yield (%)
4.5
3.9
4.5
4.7
4.8
PER (x)
18.7
21.2
12.3
10.6
9.5
Source: Company, MIDFR
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MIDF RESEARCH
Tuesday, 21 February 2017
PADINI HOLDINGS: 2QFY17 RESULTS SUMMARY
Quarterly results
Cumulative results
FYE June (RMm)
2QFY17 1QFY17 2QFY16 YoY (%) QoQ (%) 6MFY17 6MFY16 YoY (%)
Revenue
426.6
310.0
340.4
25.3
37.6
736.7
610.0
20.8
Cost of sales
(248.2)
(181.5)
(204.5)
21.4
36.8
(429.6)
(349.4)
23.0
Gross profit
178.5
128.6
135.9
31.3
38.8
307.1
260.6
17.8
4.9
3.9
0.9
436.3
26.5
8.8
5.8
51.6
Selling and distribution expenses
(88.8)
(77.3)
(75.3)
17.8
14.8
(166.1)
(145.1)
14.5
Administrative expenses
(20.7)
(14.3)
(15.8)
30.7
44.7
(34.9)
(30.7)
13.8
Profit from operations
74.0
40.9
45.7
62.0
81.2
114.9
90.6
26.8
Finance costs
(1.3)
(1.2)
(1.2)
9.2
3.0
(2.5)
(1.8)
39.5
PBT
72.7
39.6
44.5
63.4
83.6
112.4
88.8
26.5
(18.3)
(11.0)
(11.5)
59.4
65.7
(29.3)
(23.9)
22.4
PAT
54.5
28.6
33.1
64.7
90.5
83.1
64.9
28.0
PATANCI
54.5
28.6
33.1
64.7
90.5
83.1
64.9
28.0
8.3
4.4
5.0
64.6
90.3
12.6
9.9
28.1
Other income
Taxation
Basic EPS (sen)
+/(-) ppts
+/(-) ppts
Gross profit (%)
41.8
41.5
39.9
1.9
0.4
41.7
42.7
(1.0)
Operating margin (%)
17.3
13.2
13.4
3.9
4.2
15.6
14.9
0.7
PBT margin (%)
17.0
12.8
13.1
4.0
4.3
15.3
14.6
0.7
PAT margin (%)
12.8
9.2
9.7
3.1
3.5
11.3
10.6
0.6
PATANCI margin (%)
12.8
9.2
9.7
3.1
3.5
11.3
10.6
0.6
Tax rate (%)
25.1
27.8
25.7
(0.6)
(2.7)
26.1
26.9
(0.9)
Source: Company, MIDFR
DAILY PRICE CHART
Aaron Tan Wei Min |
Nabil Zainoodin
[email protected]
03-2772 1663
Source: MIDFR, Company
3
MIDF RESEARCH
Tuesday, 21 February 2017
MIDF RESEARCH is part of MIDF Amanah Investment Bank Berhad (23878 - X).
(Bank Pelaburan)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
DISCLOSURES AND DISCLAIMER
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distribution only under such circumstances as may be permitted by applicable law.
Readers should be fully aware that this report is for information purposes only. The opinions contained
in this report are based on information obtained or derived from sources that we believe are reliable.
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implied, as to the accuracy, completeness or reliability of the information contained therein and it should
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This report is not, and should not be construed as, an offer to buy or sell any securities or other
financial instruments. The analysis contained herein is based on numerous assumptions. Different
assumptions could result in materially different results. All opinions and estimates are subject to change
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MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS
STOCK RECOMMENDATIONS
BUY
TRADING BUY
NEUTRAL
SELL
TRADING SELL
Total return is expected to be >15% over the next 12 months.
Stock price is expected to rise by >15% within 3-months after a Trading Buy rating has been
assigned due to positive newsflow.
Total return is expected to be between -15% and +15% over the next 12 months.
Total return is expected to be <-15% over the next 12 months.
Stock price is expected to fall by >15% within 3-months after a Trading Sell rating has been
assigned due to negative newsflow.
SECTOR RECOMMENDATIONS
POSITIVE
The sector is expected to outperform the overall market over the next 12 months.
NEUTRAL
The sector is to perform in line with the overall market over the next 12 months.
NEGATIVE
The sector is expected to underperform the overall market over the next 12 months.
4