Result Snapshot

Padini Holdings
Bloomberg: PAD MK

Reuters: PDNI.KL

Malaysia Equity Research PP 17581/11/2012(031103)

29 Feb 2012 BUY RM1.33

Price Target : RM 1.45 (Prev RM 1.40)

Selling like hotcakes

Reporting Period 2Q2012 Performance Above Mkt Cap RM882m US$291m FY 2011A 2012F 2013F EPS Pre-Ex (sen) 11.5 13.6 14.7 EPS Gth Pre-Ex (%) 24 19 8 EPS Revision 4 4

PE (x) 11.6 9.7 9.0

PBV (x) 3.2 2.6 2.2

Net Dividend Yield (%) 3.0 4.1 4.4

Result Summary
FY Jun (RM m) 2Q12 2Q11 % Chg YoY 1Q12 % Chg YoY

P&L items Sales Gross Profit EBIT Exceptional Gain/(Loss) Pre-tax Profit Net Profit EBIT Margin (%) BS & CF items Inventory Turnover Net Cash/(Debt) Operating Cash Flow

At a Glance 6MFY12 earnings beat expectations; declares 2sen net DPS, implying 46% quarterly payout Brands Outlets to drive FY12-14F growth, boosted by mega sales; FY12-14F earnings nudged up 3-4% Maintain Buy; TP nudged up to RM1.45

202.5 99.1 39.5 0.0 38.9 28.6 19.5

141.8 70.0 20.8 0.0 20.3 14.5 14.6

42.8 41.6 90.4 n.m. 91.8 97.1

178.1 88.0 37.2 0.0 36.7 26.9 20.9

13.7 12.7 6.2 n.m. 5.8 6.0

0.8x 100.4 47.2

0.6x 113.9 39.5

0.4x 89.6 18.2

Price Relative
RM 1.5 216 1.3 1.1 0.9 0.7 116 0.5 0.3 2008 96 76 2012 196 176 156 136 Relative Index

Comment on Results 2QFY12 net profit grew 97% (+6% q-o-q) on the back of elevated sales from an earlier Lunar New Year in 2012, as well as the Christmas season. Revenue was also lifted by opening of new stores in 1HFY12 - Brands Outlet stores in OneBorneo (Aug11), 1st Avenue Penang (Oct11) and 1 Utama (Jul11), as well as Padini and Vincci stores in Johor Premium Outlet (Dec11). This took 6MFY12 earnings to RM64.6m, above expectations at 65% of our and consensus estimates. Net margins improved 3.9ppt to 14.1% vs 2QFY11s 10.2% on higher cost efficiencies as inventories were moved quicker between outlets. Padini declared 2sen net DPS for the quarter, implying 46% payout. We expect FY12F to be strong for Padini driven by strong revenue from its Brands Outlet stores. Revenues should be lifted by the Malaysia GP Sale 2012 that will run from 10 Mar to 15 Apr 2012, and Malaysian Mega Sale and Year End Sale in 2H12. Hence, we nudged up FY12-14F earnings by 3-4%, underpinned by higherthan-expected same store sales growth and better performance at new outlets. Recommendation We like Padini for its focus on effective cost management, robust growth opportunities in its Brands Outlet stores, and stable dividend payout (we expect c.40% payout for FY12F, translating into 4.1% dividend yield). Maintain Buy with higher RM1.45 TP pegged to 10x CY12F EPS.
ANALYST: CHONG Tjen San +603 2711 2295

2009

2010

2011

Padini Holdings (LHS)

Relative KLCI INDEX (RHS)

tjensan@hwangdbsvickers.com.my

Malaysian Research Team +603 2711 2222 general@hwangdbsvickers.com.my

Refer to important disclosures at the end of this report

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Result Snapshot Padini Holdings

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