KUALA LUMPUR (Aug 28): Shares of Padini Holdings Bhd’s (KL:PADINI) fell on Wednesday to their lowest in more than a year, after the apparel company reported weaker-than-expected quarterly results.
Padini declined as much as 10 sen or 3% to RM3.18, its lowest since December 2022. At that price, the company had a market capitalisation of RM2 billion. The stock, however, was thinly traded as of 9.15am, with trading volume of 145,500 shares.
Conversely, analysts expect that the worst is over for Padini in the financial year ended June 30, 2024 (FY2024), and better sales and margin growth is expected in FY2025.
In a note on Wednesday, TA Securities maintained its positive outlook on FY2025 despite Padini's FY2024 core net profit coming in below expectations due to higher than-expected operating costs.
“The management remains optimistic about the group’s performance in FY2025, supported by cost control measures, preserved cash and enhanced operational efficiency.
“For FY2025, we anticipate the group to maintain its net cash position and offer a dividend yield of 3.5% throughout the year,” the research house added.
TA Securities maintained its 'buy' call on Padini, with an unchanged target price (TP) of RM4.70.
CIMB Securities too reaffirmed that the worst is over for Padini in FY2024.
“We expect Padini to post a 15.3% year-on-year (y-o-y) growth in FY2025 net profit.
"This will be driven by six new stores opening in FY2025, which would amount to 4.7% of the total store count, and more downtrading activities by consumers with renewed focus on value-for-money propositions,” CIMB said.
“In our view, gross profit margins have bottomed (FY2024: 36.3%, down 3.2 percentage points y-o-y), as we expect Padini to raise selling prices given higher input costs,” the house added.
CIMB maintained its 'buy' call on Padini, with a lower TP of RM3.85 (RM4.25 previously).