Padini Holdings Bhd - Below Expectations
Mon, 01-Dec-2025 07:50 am
by Team Coverage • Apex Research

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PADINI (7052)

Target Price (RM)

2.13

Recommendation

Buy

  • PADINI reported a 1QFY26 CNP of RM21.5m (-0.9% YoY, +58.5% QoQ). The results came below expectations, accounting for 11% of our full-year forecast and 12% of consensus estimates.

  •  The Group declared a second interim dividend of 1.8 sen (ex-date: 12 Dec 2025).

  • Seasonally stronger year-end sales expected, but near-term performance will hinge more on managing elevated staff costs.

  • Following the earnings miss, we have lowered our FY26F and FY27F earnings forecasts by 10% to reflect more conservative sales projections.

  • We maintain our BUY recommendation with a lower TP of RM2.13 (from RM2.37), based on a 12.3x PER applied to our FY26F EPS of 17.2 sen, ascribed with three-star ESG rating.

 

Below Expectations. Excluding forex loss (+RM0.3m), provisions for inventory write-offs (+RM1.8m) and other EIs, PADINI reported a 1QFY26 CNP of RM21.5m (-0.9% YoY, +58.5% QoQ). The results came below expectations, accounting for 11% of our full-year forecast and 12% of consensus estimates. 

 

Dividend. The Group declared a second interim dividend of 1.8 sen (ex-date: 12 Dec 2025).

 

YoY. 1QFY26 CNP slipped 0.9% to RM21.5m as higher staff costs lifted OPEX (selling and distribution costs: +7% YoY), offsetting a 2.0% YoY sales increase. GP margin nonetheless expanded by 4%-pts YoY, likely on a more favourable product mix. 

 

QoQ. 1QFY25 CNP rose 58.5% QoQ, supported by a 2% increase in revenue despite the absence of festive spending. GP margin also improved by 3%-pts QoQ, likely due to fewer promotions and more regular-priced sales post-festive season.

 

Outlook. Looking ahead, we expect sales to improve in the seasonally stronger year-end quarter, supported by Christmas and school holidays that typically lift mall footfall. Staff costs may remain elevated in the near term as wage inflation stays firm. Nevertheless, the upcoming RFID system, set to go live in FY26, should streamline inventory processes and help moderate staffing needs over time. Overall, the Group’s near-term performance should hold steady but will likely hinge more on cost management than topline growth.

 

Earnings Revision. Following the earnings miss, we have lowered our FY26F and FY27F earnings forecasts by 10% to reflect more conservative sales projections.

 

Valuation & Recommendation. We maintain our BUY recommendation with a lower TP of RM2.13 (from RM2.37), based on a 12.3x PER applied to our FY26F EPS of 17.2 sen. This target price incorporates a 0% ESG premium/discount, consistent with the Group's three-star ESG rating.

 

Risk. Forex volatility may cause short term increases in material cost and freight charges.

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Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

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