This article first appeared in Capital, The Edge Malaysia Weekly on July 27, 2026 - August 2, 2026
PADINI Holdings Bhd (KL:PADINI) recently announced that all its affected bank accounts had been released by the Malaysia Anti-Corruption Commission (MACC). This came nearly three months after the apparel company disclosed that 21 of its accounts had been frozen in connection with an investigation by the anti-graft agency involving external vendors.
While Padini has distanced itself from the incident, emphasising that none of its directors, officers, employees or representatives have been charged in connection with the investigation, its share price has taken a beating over the last few months, falling 12.8% to a low of RM1.36 on June 8 from RM1.56 on April 16.
It was only after the bank accounts were released that the shares began to gain momentum. Could this be an opportunity for investors to look beyond the incident and accumulate the stock?
BIMB Securities Research analyst Sabariah Akhair believes that the market’s focus will gradually shift to Padini’s fundamentals, but adds that the recent events involving the MACC could leave some governance and reputational overhang in the near term.
“The key concern previously was uncertainty rather than the financial impact itself. With the accounts reportedly released and the company resuming normal operations, investors may become more comfortable reassessing Padini based on earnings prospects, cash flow generation and dividend sustainability.
“That said, the episode may leave some governance and reputational overhang in the near term. Institutional investors tend to be cautious until confidence is fully restored.
“Nevertheless, if Padini continues to deliver stable operating performance and there are no further regulatory issues, we expect the importance of this risk factor to diminish over time relative to its core business fundamentals,” she says in an email reply to The Edge.
Notably, Kumpulan Wang Persaraan (Diperbadankan) (KWAP) has been paring down its stake in the group since April 27. Over the span of three months, KWAP has disposed of a 1.65% direct stake and a 0.152% indirect stake in the group.
KWAP’s latest share disposal in Padini took place on July 21, when it sold 58,800 shares. Following the disposal, KWAP’s direct stake in the fashion retailer fell to 8.59% from 10.24% on Jan 7, while its indirect stake declined to 0.206% from 0.358%.
Similarly, the Employees Provident Fund (EPF) has also reduced its stake in Padini by 0.784% over the last three months. As at June 18, it held 101.4 million shares in the company, equivalent to a 10.275% stake.
EPF and KWAP are the second and third largest shareholders in Padini, behind founder and managing director Yong Pang Chaun, who holds a 43.74% stake through private investment vehicle Yong Pang Chaun Holdings Sdn Bhd.
While some institutional investors appear to be sitting on the sidelines, others may be ready to jump into action. Padini’s shares rebounded sharply after the announcement that its bank accounts had been unfrozen on July 16, jumping 14.3% over two trading days from RM1.39 on July 15 to RM1.59 on July 17. However, the momentum was short-lived, with the stock giving up some of those gains to close at RM1.53 on July 21.
One investor who picked up shares during this period was from the founding family of the fashion retailer. Filings with Bursa Malaysia show that Andrew Yong Tze How, the son of Pang Chaun, acquired 30,000 shares in two transactions on July 20 at RM1.58 (10,000 shares) and RM1.59 (20,000 shares) apiece.
The share acquisition was the Yong family’s first transaction since the MACC investigation came to light.
CIMB Securities believes Padini could see a rerating now that the overhang has been removed and has reiterated its “buy” call on the stock with a target price of RM1.80, based on a CY2027 price-earnings ratio (PER) of 11.9 times.
“We believe Padini could rerate as the market has largely priced out the risk premium associated with the MACC investigation following the group’s confirmation that there have been no arrests, charges or forfeiture proceedings,” CIMB Securities said in a July 17 report.
That said, while the removal of the risk associated with the MACC investigation is certainly a positive for the group, the key question now is whether it can weather a competitive retail landscape and weak consumer sentiment.
Retail Group Malaysia (RGM) has already revised downwards its projection for the annual growth rate of retail sales in 2026 to 3.8% from 4% previously. It expects retail sales to grow by only 2.9% and 3.9% in the third and fourth quarters of 2026 respectively.
For the cumulative nine months ended March 31, 2026 (9MFY2026), the group reported a 17.3% year-on-year decline in net profit to RM122.24 million on the back of a 2.3% y-o-y drop in revenue to RM1.51 billion, as sales softened amid subdued consumer sentiment. Net profit was also dragged down by higher depreciation and the imposition of service tax on rental, which took effect in July 2025.
In a May 28 report, Kenanga Research pointed out that while near-term headwinds in the apparel retail environment from inflation and competition remain, Padini’s shift towards high-margin products such as activewear and intellectual property (IP) products should help sustain gross margins of between 36% and 40%.
Padini, which positions itself in the affordable fashion segment, could, to a certain extent, benefit from consumers “downtrading” during a period of weak consumer sentiment, says BIMB’s Sabariah.
“Its relatively affordable price point positions it favourably when consumers become more value-conscious. During weaker economic conditions, consumers often trade down from premium international brands to more affordable local brands while still seeking acceptable quality and fashion relevance,” she says.
However, she adds that she does not view the fashion retailer as a pure defensive play or a clear “downtrading winner”, pointing to the group’s March 2026 earnings, which reflected softer discretionary spending.
“While Padini’s value-for-money positioning provides some resilience, overall apparel demand remains discretionary and is still exposed to broader consumer sentiment and spending patterns,” she explains.
Padini’s strong balance sheet should prove useful amid soft consumer sentiment. As at March 31, 2026, the group had cash and cash equivalents of RM904.78 million and no borrowings. Its strong net cash position is one of the reasons why Kenanga Research favours the stock, as the sizeable cash pile enables efficient inventory management.
The research firm has an “outperform” call on the stock with a target price of RM1.75, based on an FY2027 PER of 11 times, representing a 20% discount to the apparel sector’s historical average forward PER of 14 times.
Analysts also point to Padini’s attractive dividend yield, with its trailing 12-month dividend yield standing at 6.1%. This year, the company has declared dividends totalling 9.2 sen per share.
Notably, Padini’s dividend payout ratio increased from 34% in FY2023 to 61.2% in FY2025.
According to Bloomberg data, Padini has an average 12-month target price of RM1.80, implying an upside potential of 19% based on its closing price of RM1.51 last Thursday. The stock has five “buy” calls and three “hold” calls from analysts.
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's App Store and Android's Google Play.