KUALA LUMPUR (April 27): Padini Holdings Bhd (KL:PADINI) fell on Monday to its lowest in more than five years following disclosure that some of its bank accounts were frozen by authorities.
Analysts said the selldown is likely kneejerk reaction than due to change in fundamentals, given that the accounts affected are not actively used for daily operations while banking facilities remain available.
“At this stage, we believe the development is primarily a near-term sentiment risk, given the limited disclosure surrounding the investigation and potential headline volatility until further clarity emerges,” MBSB Research said and maintained its ‘buy’ call on the stock.
Padini fell as much as 15 sen or nearly 10% to RM1.40, its lowest since November 2020. The stock ended Monday off lows at RM1.44 after nearly 32 million shares changed hands. At the last price, the company's market capitalisation was RM1.4 billion.
Shares of Padini have lost more than 20% of its value since the year began as the company grappled with weaker than expected earnings. Padini was also caught in the broader market selldown amid the outbreak of the Iran war. The stock also has been losing favour with analysts.
The company has gone from near-unanimous ‘buy’ calls ahead of its February results announcement to just five, with the remaining four on ‘hold’ ratings and there are no ‘sell’ calls. The latest average target price of RM2.13 based on the nine research houses tracked by Bloomberg.
Still, “absent any evidence of operational disruption or direct allegations against the company, we do not expect any immediate earnings impact,” MBSB Research added.
On its part, Padini said the freeze order is linked to an ongoing investigation by the Malaysian Anti Corruption Commission (MACC) involving certain external counterparties who are not employees, officers, or part of management.
Padini, which operates the eponymous apparel brand ubiquitous in Malaysian shopping malls, has yet to hold an analyst briefing to address the matter as of Monday.
The net cash company is now trading at about 10 times its trailing earnings compared to the average of 18 times over the past seven years.
In the first half of its financial year ending June 2026, Padini made a net profit of RM61.7 million on revenue of RM885.10 million. The company also has cash and cash equivalents totalled RM818.87 million, the latest available filing showed.