Topics: Retailing, Stock market, Stock Pages: 7 (1911 words) Published: July 25, 2013

M&A Securities

Initiation Coverage
5 March 2013, Tuesday

“Middle income specialist as a defensive stock for 1Q13”

BUY (FV: RM2.32)
Current Price (RM) New Fair Value (RM) Previous Fair Value (RM) Previous Recomm. Upside To Fair Value RM1.82 RM2.32 NA NA 27.47%

Dividend Yield


Market Access

Padini Holdings Berhad is a Malaysia-based investment holding company. The company sells both i) men’s and ladies’ shoes and accessories; ii) garments: iii) maternity wear through various subsidiaries. The most prominent brands are Padini and VINCCI. It’s mainly exported their goods to Asian Countries. In 1995, Padini Holdings Sdn Bhd was converted to a public listed company and changed their name to Padini Holding Berhad soon they’re listed in Second Board in KLSE. Padini was then transferred to the Main Board in 2005. We initiate coverage for Padini with a BUY call with fair value of RM2.30. The Fair Value is derived by pegging its 1-year P/E of 12.46x to its FY13 EPSf at 18.75 sen. It has a 34.1% upside to the current price.

Stock Code
Bloomberg PAD MK

Stock & Market Data
Listing Sector Shariah Compliance Issued Shares Market Cap YTD Chg In Share Price Beta (x) 52-week Hi/Lo 6M Average Volume (shares) Estimated Free Float MAIN MARKET Consumer No 657.9mn RM1164.5mn -4.32% 1.16 RM1.19 RM2.37 1.45mn 50.1%

Major Shareholders
Pang Chaun Yong ASB Capital Dynamics Asset Management Royce And Associates INC 43.97% 5.01% 3.45% 2.33%

Accolades:  2009: Recognized as one of the Malaysia’s Top 30 Most Valuable Brands  2012: Recognized as one of the Malaysia’s Top 30 Most Valuable Brands  2012: Awarded Putra Most promising Brand of the Year 03-26918887 ext 111

Initiation Coverage- Padini

Padini Brands Padini Padini Authentics

Description Garments for office and official occasion for mid-20’s and 30’s for both gender. Casual wear for both between aged 5 to 45. genders

PDI Basic garments for both genders between teens to mid-30. Seed Contemporary fashion for kids aged 3 to pre-teen and young adults for both genders. P&Co Fashionable garment for female aged 15 to mid-20’s. Miki Kids Children’s garment aged 3 to 13. Miki Maternity Garment for pregnant lady. Vincci Affordable shoes and handbags for females. Trendy accessories for ladies. Handbags and shoes at higher price for ladies. Garments, handbags, bags, shoes and accessories for kids, ladies and men at affordable price.

Market Access

Vincci Accessories Vincci+ Brands Outlet

Financial Highlight: For the last 5 years, Padini’s revenue grew with CAGR 18%. The PAT margin for FY12 has increased by 3% to 13% compared with FY09. Meanwhile, EPS for 1Q13 dropped by 0.22 sen from 4.10 sen. Proven Track Record: With EPS CAGR growth of 18% for 5 years, Padini has delivered profitable net income although there are many new entries especially for the international brands. We forecast 17-18% p.a. EPS growth for FY13 to FY15. Market Leader: Opening in Aug 2012, the Brands Outlet that is located in Farenheit 88 Bukit Bintang has performed well and same goes to Brands Outlet and Padini Concept Store in Paradigm Mall in Petaling Jaya. However, their main competitors are H&M and Uniqlo. But, Padini remain as a market leader with 45% of the market share.

Research Team 03-22821820 ext 257, 221, 260, 249


Initiation Coverage- Padini
Dividend Yield: Padini have distributed 6 sen dividend per share for FY11 and its equivalent to 3.5% of dividend yield as price per share is RM1.73. However, we forecast for the next dividend yield should be 4.6%. Market Presence: Padini has extended its presence especially for Brands Outlet in the suburban areas such as KB Mall (Kelantan), Kluang Mall and AEON Bukit Indah (Johor), East Cost Mall (Pahang).

Market Access

Manufacturers: Padini is currently reducing the garments supplies from Chinese manufacturer because it does not...
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