PP16832/01/2012 (029059)
Malaysia
Results Review
30 November 2011
Padini Holdings
Buy (unchanged)
Strong earnings momentum
Share price:
Target price:
RM1.05
RM1.16 (unchanged)
Excellent growth. Padini’s 1QFY12 earnings were strong, with net
profit of RM27m up 47% YoY (+49% QoQ). Although above our
expectations (1Q is typically a strong quarter), we maintain our
forecasts on anticipation that sales could moderate into 2HFY12 on the
back of slower domestic consumption. For its strong retail presence and
increasingly resilient earnings model through its Brands Outlets, Padini
remains a Buy with an unchanged TP of RM1.16 (CY12 PER of 9.2x).
Kang Chun Ee
chunee@maybank-ib.com
(603) 2297 8675
Stock Information
Description: Retails garments, shoes, ancillary products,
and accessories.
Ticker:
Shares Issued (m):
Market Cap (RM m):
3-mth Avg Daily Volume (m):
KLCI:
Free float (%):
PAD MK
657.9
690.8
0.48
1,444.72
27.9
Major Shareholders:
Pang Chaun Yong
%
44.0
Key Indicators
Net cash / (debt) (RM m):
NTA/shr (RM):
Net Gearing (x):
89.6
0.46
Cash
A new record. Revenue recorded a new high of RM178m in 1QFY12,
which translates into YoY and QoQ growth of more than 30%. While
this was within our expectation, the improvement in EBIT margin
surprised us on the upside. The group’s 1Q gross profit margin declined
by 3.6-ppts YoY to 49.4% as higher cotton prices since the start of
CY2010 continued to put pressure to its cost of goods sold. Despite
this, EBIT margin improved 2-ppts YoY to 20.6% due to increased
efficiency in merchandizing. Overall, 1Q net profit accounted for 34% of
our full year forecast and 33% of consensus.
New stores drive revenue growth. While QoQ revenue growth was
driven by festivals, YoY revenue growth was due to stores expansion in
the past 12 months. From Oct 2010 to Sep 2011, the group has opened
4 Brands Outlet stores and 2 Padini Concept Stores. The sales of own
products in the Brands Outlet stores rose 86% YoY to contribute about
15% to total revenue in 1QFY12 vs. 11% in 1QFY11, while the Brands
Outlet stores now contribute to about 20% of group revenue.
4 new stores in the pipeline. There will be 1 Padini Concept Store and
1 Brands Outlet each, in The Paradigm (Kelana Jaya) and Setia City
Mall (Shah Alam) by end-CY12. Presence at the Johor Premium Outlet
(to open on 11 Dec 2011) will also enhance its market reach to tourists
travelling between Singapore and Malaysia.
Padini Holdings Berhad– Summary Earnings Table
Historical Chart
1.4
PAD MK Equity
1.2
1.0
0.8
0.6
0.4
PER
EV/EBITDA (x)
Div Yield (%)
P/BV(x)
0.2
0.0
Dec-09
Apr-10
Aug-10 Dec-10
Performance:
52-week High/Low
Apr-11
Aug-11
Net Gearing (%)
ROE (%)
ROA (%)
Consensus Net Profit (RM m)
Source: Maybank IB
RM1.35/RM0.82
1-mth
3-mth
6-mth
1-yr
YTD
1.0
3.5
(3.7)
3.1
(11.0)
(5.9)
5.4
8.8
(3.7)
1.2
Absolute (%)
Relative (%)
FYE Jun(RM m)
Revenue
EBITDA
Recurring Net Profit
Recurring Basic EPS (Sen)
EPS growth (%)
DPS (Sen)
2009A
475.5
88.2
49.5
7.5
18.7%
2.4
2010A
522.9
107.0
61.0
9.3
23.1%
4.5
2011A
558.6
125.8
75.3
11.4
23.4%
4.0
2012F
611.9
133.9
78.9
12.0
4.9%
4.0
2013F
699.2
145.4
86.4
13.1
9.5%
4.0
13.9
7.5
2.3
3.4
11.3
5.5
4.3
2.9
9.2
4.8
3.8
2.4
8.8
3.8
3.8
2.1
8.0
3.2
3.8
1.8
NA
26.5%
17.8%
NA
NA
27.8%
18.8%
NA
NA
29.1%
18.8%
NA
NA
25.8%
17.4%
81.6
NA
24.0%
17.2%
90.1
Kim Eng Hong Kong is a sub sid iar y of Malayan B anking B erh ad
SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
Padini Holdings
Padini: Results Summary Table
Quarterly
FY Jun (RM m)
Sales
Cost of Goods Sold
Gross Profit
Other income / (loss)
Administrative Expenses
Selling and Marketing Expenses
EBIT
Interest Income
Interest Expense
Pretax Profit
Tax
Net Profit
1QFY12
178.1
(90.2)
88.0
1.3
(8.1)
(44.5)
36.7
0.6
(0.5)
36.7
(9.8)
26.9
1QFY11
136.6
(64.3)
72.3
0.5
(7.8)
(39.7)
25.3
0.6
(0.3)
25.7
(7.3)
18.3
49.4
20.6
26.7
52.9
18.6
28.5
Gross profit margin (%)
EBIT margin (%)
Tax rate (%)
% YoY
30.4
40.2
21.6
150.7
3.8
12.1
44.6
(1.3)
85.8
43.2
34.1
46.9
+/- p.pts
YoY
(3.6)
2.0
(1.8)
4QFY11
132.1
(65.0)
67.1
0.7
(7.6)
(35.0)
25.2
0.6
(0.4)
25.4
(7.3)
18.1
% QoQ
34.8
38.7
31.0
85.0
7.4
27.0
45.3
(0.7)
10.3
44.9
34.4
49.1
+/- p.pts
QoQ
(1.4)
1.5
(2.1)
50.8
19.1
28.7
Source: Company, Maybank IB
Padini Holdings: One-year forward PER
PE (x)
25
20
15
+1sd: 12.9
mean: 9.2
10
5
-1sd: 5.5
Jun-11
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
Jun-99
Jun-98
0
Source: Bloomberg, Maybank IB
30 November 2011
Page 2 of 5
Padini Holdings
INCOME STATEMENT (RM m)
FYJun
BALANCE SHEET (RM m)
2010A
2011A
2012F
2013F
FYJun
Revenue
EBITDA
Depreciation & Amortisation
Operating Profit (EBIT)
Interest (Exp)/Inc
Associates
One-offs
Pre-Tax Profit
Tax
Minority Interest
Net Profit
Recurring Net Profit
522.9
107.0
(21.8)
85.2
1.1
0.0
0.0
86.3
(25.3)
0.0
61.0
61.0
558.6
125.8
(22.3)
103.5
1.1
0.0
0.0
104.6
(29.3)
0.0
75.3
75.3
611.9
133.9
(26.7)
107.1
2.4
0.0
0.0
109.6
(30.6)
0.0
78.9
78.9
699.2
145.4
(29.1)
116.3
3.7
0.0
0.0
120.0
(33.5)
0.0
86.4
86.4
Revenue Growth %
EBITDA Growth (%)
EBIT Growth (%)
Net Profit Growth (%)
Recurring Net Profit Growth (%)
Tax Rate %
10.0%
21.3%
24.4%
23.1%
23.1%
29.3%
6.8%
17.6%
21.5%
23.5%
23.5%
28.0%
9.5%
6.4%
3.5%
4.8%
4.8%
28.0%
14.3%
8.6%
8.5%
9.5%
9.5%
28.0%
2010A
2011A
2012F
2013F
86.3
21.8
(1.1)
24.7
(26.7)
(11.5)
93.5
(25.6)
0.0
(0.8)
(26.4)
0.0
0.0
0.0
0.0
3.1
3.1
70.2
104.6
22.3
(1.1)
(66.1)
(29.2)
(1.5)
29.1
(24.0)
19.7
2.3
(2.0)
10.2
0.0
0.0
0.0
(32.9)
(22.7)
4.4
109.6
26.7
(2.4)
10.6
(34.4)
(23.9)
86.2
(30.9)
0.0
0.0
(30.9)
0.0
0.0
0.0
0.0
(1.8)
(1.8)
53.5
120.0
29.1
(3.7)
(2.6)
(37.6)
(22.6)
82.5
(34.0)
0.0
0.0
(34.0)
0.0
0.0
0.0
0.0
0.6
0.6
49.1
CASH FLOW (RM m)
FYJun
Profit before taxation
Depreciation
Net interest receipts/(payments)
Working capital change
Cash tax paid
Others (incl'd exceptional items)
Cash flow from operations
Capex
Disposal/(purchase)
Others
Cash flow from investing
Debt raised/(repaid)
Equity raised/(repaid)
Dividends (paid)
Interest payments
Others
Cash flow from financing
Change in cash
2010A
2011A
2012F
2013F
Fixed Assets
Other LT Assets
Cash/ST Investments
Other Current Assets
Total Assets
80.0
12.3
135.0
129.3
356.6
83.6
10.5
138.6
212.2
444.9
89.0
11.4
217.9
145.9
464.1
93.9
16.5
266.0
164.1
540.5
ST Debt
Other Current Liabilities
LT Debt
Other LT Liabilities
Minority Interest
Shareholders' Equity
Total Liabilities-Capital
26.1
85.2
10.1
0.8
0.0
234.3
356.6
32.1
114.0
15.0
1.6
0.0
282.3
444.9
22.0
101.5
11.3
0.0
0.0
329.4
464.1
26.4
117.1
7.5
0.0
0.0
389.5
540.5
Share Capital (m)
Gross Debt/(Cash)
Net Debt/(Cash)
Working Capital
65.8
36.3
(98.8)
153.0
65.8
47.0
(91.6)
204.7
65.8
33.3
(184.6)
240.3
65.8
33.9
(232.1)
286.6
FYJun
2010A
2011A
2012F
2013F
EBITDA Margin %
Op. Profit Margin %
Net Profit Margin %
ROE %
ROA %
Net Margin Ex. El %
Dividend Cover (x)
Interest Cover (x)
Asset Turnover (x)
Asset/Debt (x)
Debtors Turn (days)
Creditors Turn (days)
Inventory Turn (days)
Net Gearing %
Debt/ EBITDA (x)
Debt/ Market Cap (x)
20.5%
16.3%
11.7%
27.8%
18.8%
11.7%
2.1
NA
1.5
9.8
11.3
63.2
107.7
NA
0.3
0.1
22.5%
18.5%
13.5%
29.1%
18.8%
13.5%
2.9
NA
1.3
9.5
15.3
63.2
238.0
NA
0.4
0.1
21.9%
17.5%
12.9%
25.8%
17.4%
12.9%
3.0
NA
1.3
14.0
15.3
63.2
86.1
NA
0.2
0.0
20.8%
16.6%
12.4%
24.0%
17.2%
12.4%
3.3
NA
1.3
15.9
15.3
63.2
82.0
NA
0.2
0.0
RATES & RATIOS
Source: Company, Maybank IB
30 November 2011
Page 3 of 5
Padini Holdings
APPENDIX 1
Definition of Ratings
Maybank Investment Bank Research uses the following rating system:
BUY
HOLD
SELL
Total return is expected to be above 10% in the next 12 months
Total return is expected to be between -5% to 10% in the next 12 months
Total return is expected to be below -5% in the next 12 months
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are
only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not
carry investment ratings as we do not actively follow developments in these companies.
Some common terms abbreviated in this report (where they appear):
Adex = Advertising Expenditure
BV = Book Value
CAGR = Compounded Annual Growth Rate
Capex = Capital Expenditure
CY = Calendar Year
DCF = Discounted Cashflow
DPS = Dividend Per Share
EBIT = Earnings Before Interest And Tax
EBITDA = EBIT, Depreciation And Amortisation
EPS = Earnings Per Share
EV = Enterprise Value
FCF = Free Cashflow
FV = Fair Value
FY = Financial Year
FYE = Financial Year End
MoM = Month-On-Month
NAV = Net Asset Value
NTA = Net Tangible Asset
P = Price
P.A. = Per Annum
PAT = Profit After Tax
PBT = Profit Before Tax
PE = Price Earnings
PEG = PE Ratio To Growth
PER = PE Ratio
QoQ = Quarter-On-Quarter
ROA = Return On Asset
ROE = Return On Equity
ROSF = Return On Shareholders’ Funds
WACC = Weighted Average Cost Of Capital
YoY = Year-On-Year
YTD = Year-To-Date
Disclaimer
This report is for information purposes only and under no circumstances is it to be considered or intended as an offer to sell or a solicitation
of an offer to buy the securities referred to herein. Investors should note that income from such securities, if any, may fluctuate and that each
security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental
ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on
price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.Accordingly, investors may
receive back less than originally invested. Past performance is not necessarily a guide to future performance. This report is not intended to
provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the
particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding
the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been indepe ndently
verified by Maybank Investment Bank Berhad and consequently no representation is made as to the accuracy or completeness of this report
by Maybank Investment Bank Berhad and it should not be relied upon as such. Accordingly, no liability can be accepted for any direct,
indirect or consequential losses or damages that may arise from the use or reliance of this report. Maybank Investment Bank Berhad, its
affiliates and related companies and their officers, directors, associates, connected parties and/or employees may from time to time have
positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an
underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and
other services for or relating to those companies. Any information, opinions or recommendations contained herein are subject to change at
any time, without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”,
“believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”,
“should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions
made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ
materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forwardlooking statements. Maybank Investment Bank Berhad expressly disclaims any obligation to update or revise any such forward looking
statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated
events.
This report is prepared for the use of Maybank Investment Bank Berhad's clients and may not be reproduced, altered in any way, transmitted
to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written cons ent of Maybank
Investment Bank Berhad and Maybank Investment Bank Berhad accepts no liability whatsoever for the actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any
locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
30 November 2011
Page 4 of 5
Padini Holdings
APPENDIX 1
Additional Disclaimer (for purpose of distribution in Singapore)
This report has been produced as of the date hereof and the information herein maybe subject to change. Kim Eng Research Pte Ltd
("KERPL") in Singapore has no obligation to update such information for any recipient. Recipients of this report are to contact KERPL in
Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor,
expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), KERPL sh all be legally
liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.
As of 30 November 2011, KERPL does not have an interest in the said company/companies.
Additional Disclaimer (for purpose of distribution in the United States)
This research report prepared by Maybank Investment Bank Berhad is distributed in the United States (“US”) to Major US Institutional
Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Kim Eng Securities USA, a brokerdealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended).
All responsibility for the distribution of this report by Kim Eng Securities USA in the US shall be borne by Kim Eng. All resulting transactions
by a US person or entity should be effected through a registered broker-dealer in the US.
This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not
be eligible for sale in all jurisdictions or to certain categories of investors. This report is not directed at you if Kim En g Securities is prohibited
or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it
that Kim Eng Securities is permitted to provide research material concerning investments to you under relevant legislation and regulations.
Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply if the reader is
receiving or accessing this report in or from other than Malaysia.
As of 30 November 2011, Maybank Investment Bank Berhad and the covering analyst does not have any interest in in any companies
recommended in this Market themes report.
Analyst Certification:
The views expressed in this research report accurately reflect the analyst's personal views about any and all of the subject securities or
issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations
or views expressed in the report.
Additional Disclaimer (for purpose of distribution in the United Kingdom)
This document is being distributed by Kim Eng Securities Limited, which is authorised and regulated by the Financial Services Auth ority and
is for Informational Purposes only.This document is not intended for distribution to anyone defined as a Retail Client under the Financial
Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does
not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report
should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own
independent tax advisers.
Published / Printed by
Maybank Investment Bank Berhad (15938-H)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur
Tel: (603) 2059 1888; Fax: (603) 2078 4194
Stockbroking Business:
Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur
Tel: (603) 2297 8888; Fax: (603) 2282 5136
http://www.maybank-ib.com
30 November 2011
Page 5 of 5