Padini Holdings Bhd - Below Expectations
Fri, 27-Feb-2026 07:47 am
by Daryl Hon • Apex Research

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PADINI (7052)

Target Price (RM)

1.80

Recommendation

Hold

  • PADINI reported a 2QFY26 CNP of RM47.0m (-21.4% YoY, +110.2% QoQ), bringing the 6MFY26 CNP to RM69.4m. The results came below expectations, only accounting for only 41% of our full-year forecast and 43% of consensus estimates.

  •  The Group declared a third interim dividend of 1.8 sen (ex-date: 12 Mar 2026).

  • Following the earnings miss, we have lowered our FY26F and FY27F earnings forecasts by 15% and 23% respectively to reflect more conservative sales projections.

  • Downgrade to HOLD (from BUY) with a lower TP of RM1.80 (from RM2.13), based on an unchanged 12.3x PER applied to our FY26F EPS of 14.6 sen.

 

Below Expectations. Excluding forex loss (+RM3.0m), provisions for inventory write-offs (+RM2.8m) and other EIs, PADINI reported a 2QFY26 CNP of RM47.0m (-21.4% YoY, +110.2% QoQ), bringing the 6MFY26 CNP to RM69.4m. The results came below expectations, only accounting for only 41% of our full-year forecast and 43% of consensus estimates. 

 

Dividend. The Group declared a third interim dividend of 1.8 sen (ex-date: 12 Mar 2026).

 

YoY. 2QFY26 CNP declined 21.4% YoY, broadly in line with the 7.9% drop in revenue amid softer overall demand. The decline was also attributable to a 12% YoY increase in operating expenses, partly reflecting higher depreciation and the service tax imposed on rental following the July 2025 Service Tax scope expansion.

 

 QoQ. 2QFY26 CNP surged 110.2% QoQ, supported by a 20.7% rise in revenue driven by stronger festive spending during Christmas and the year-end school holidays. GP margin remained stable at c.40%, likely supported by a more favourable sales mix, with higher contribution from IP products, particularly sportswear, which has seen increasing in-store presence.

 

Outlook. We expect sales to improve in 3QFY26, supported by stronger mall footfall during the Chinese New Year and Hari Raya festive periods, which typically drive higher retail spending. Nevertheless, we remain cautious on FY26F earnings as discretionary spending remains uneven despite stable macro conditions, with consumers staying price-sensitive amid lingering cost pressures, which may cap demand momentum outside festive seasons.

 

Earnings Revision. Following the earnings miss, we have lowered our FY26F and FY27F earnings forecasts by 15% and 23% respectively to reflect more conservative sales projections.

 

Valuation & Recommendation. We downgrade to HOLD (from BUY) with a lower TP of RM1.80 (from RM2.13), based on an unchanged 12.3x PER applied to our FY26F EPS of 14.6 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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