Padini Holdings Bhd - ’Tis the festive season
Wed, 18-Mar-2026 07:42 am
by Research Team • Apex Research

Counter

PADINI (7052)

Target Price (RM)

1.80

Recommendation

Hold

  • With both Hari Raya and Chinese New Year falling in March this year, we expect a seasonal uplift in 3QFY26 performance before normalising in 4QFY26 in the absence of festive-driven spending.

  • 1HFY26 GP margin strengthened to 39.8% (1HFY25: 38.1%) on reduced markdown activity in the recent quarters. Our FY26–FY27F GP margin assumptions are maintained at 39%.

  • The Group plans to open 5–6 new stores and renovate at least 10 outlets in FY26, supporting incremental sales support. However, softer consumer sentiment amid geopolitical tensions may partly offset these gains.

  • We maintain our HOLD call with an unchanged TP of RM1.80, based on 12.3x PER (-0.5SD to the 5-year historical mean) applied to our FY26F EPS of 14.6 sen.

     

The festive effect. Our historical review suggests that quarterly performance at PADINI is influenced more by the pre-festive shopping window, as consumers typically purchase apparel 3–6 weeks before Hari Raya. When Hari Raya falls later in May, as seen in FY21–FY22, festive demand is largely recognised in Q4, with margins also stronger during the festive quarter. However, when the celebration occurs earlier in April or late March, festive spending tends to be pulled forward into Q3, as observed in FY23–FY25, resulting in stronger margins in Q3 while Q4 margins ease post-festive due to normalising sales and higher markdowns. With both Hari Raya and Chinese New Year falling in March this year, we expect a seasonal uplift in 3QFY26 performance, as sales momentum builds ahead of the celebration, before normalising in 4QFY26 in the absence of festive-driven spending. 

 

Margins remain healthy. 1HFY26 GP margin strengthened to 39.8% (1HFY25: 38.1%), supported by reduced markdown activity in recent quarters. The Group has also been expanding its IP product offerings, including collaborations with Sanrio, which typically command higher margins and enjoy broader product appeal. Taking into account the typically stronger festive-driven margins in 3Q, we expect margins to remain within the Group’s 36%–40% guidance, with our FY26–FY27F GP margin assumptions maintained at 39%.

 

Expansion and refurbishment plans. PADINI plans to open 5–6 new stores in FY26 as part of its ongoing expansion pipeline. In addition, the Group intends to renovate at least 10 existing outlets, which may provide incremental support to sales performance in the coming quarters. In FY25, a total of 16 stores were renovated, which historically resulted in a modest c.3% sales uplift post-renovation. That said, potential sales from store expansion and refurbishment could be partly offset by softer consumer sentiment in the remaining quarters amid heightened geopolitical tensions, particularly the ongoing US–Iran conflict, which may weigh on discretionary spending as oil and energy prices continue to rise. 

 

Earnings Revision. No changes to our earnings forecast at this juncture.

 

Valuation and Recommendation. While near-term performance may benefit from festive demand, we believe upside remains limited given the seasonal nature of the boost. Thus, we maintain our HOLD call with an unchanged TP of RM1.80, based on 12.3x PER (-0.5SD to the 5-year historical mean) applied to our FY26F EPS of 14.6 sen. Our target price incorporates a 0% ESG premium/discount, in line with the Group’s three-star ESG rating.

 

Risks. Increasing competition, weaker consumer spending patterns and rise in material costs can affect the Group’s overall profitability 

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