KUALA LUMPUR (Dec 2): AllianceDBS Research has maintained its “Buy” rating on Padini Holdings Bhd at RM1.75 with a higher target price of RM2.05 (from RM1.50) and said Padini is able to sustain its double-digit earnings growth momentum for FY16

In his note today, AllianceDBS IB vice president for equity Cheah King Yoong said for 1QFY16, the overall same store sales growth (SSSG) was up 14% (+7% in FY15), driven mainly by 23% SSSG in Padini Concept Stores (PCS), due to its mix-and-match bundling strategy.

“Our channel checks indicate that such a pricing strategy remains attractive among consumers and we believe that its sales momentum will remain strong over the next few quarters.

“We raise our FY16-17 earnings estimates by c.34%, reflecting the combined effect of (1) higher FY16-17 SSSG to 7%/0.8% (previously - 0.5%/-0.4%), and (2) higher FY16-17 GP margin of

43.4%/43.1% (previously 42.2%/ 42.5%).

“We also introduce FY18 earnings estimates. Upon earnings revisions, we upgrade our target price for Padini to RM2.05, based on an unchanged 12x FY16 PE. Buy maintained,” he said.