PADINI reported a 3QFY26 core net profit (CNP) of RM64.3m (-12.7% YoY, +36.7% QoQ), bringing 9MFY26 CNP to RM133.7m. The results came within our and consensus expectations, accounting for 93% and 90% of full-year forecasts respectively, which we deem reasonable given Padini’s historically softer 4Q earnings profile.
The Group declared a fourth interim dividend of 1.8sen (ex-date: 12 June 2026), bringing total 9MFY26 DPS to 7.4sen (9MFY25: 7.1sen).
Maintain HOLD with a lower TP of RM1.45 (from RM1.80), after rolling forward our valuation base to FY27F and applying a lower target P/E of 10.5x FY27F EPS of 13.8sen (from 12.3x FY26F EPS of 14.6sen), representing below -1SD of its 3-year forward P/E mean.
Within Expectations. Excluding forex loss (+RM0.2m) and inventory write-offs (+RM3.9m), PADINI reported a 3QFY26 CNP of RM64.3m (-12.7% YoY, +36.7% QoQ), bringing the 9MFY26 CNP to RM133.7m. The results came within expectations, accounting for only 93% of our full-year forecast and 90% of consensus estimates supported by stronger festive-driven demand during the quarter.
Dividend. The Group declared a fourth interim dividend of 1.8sen (ex-date: 12 June 2026) (3QFY25: 2.8sen), bringing total DPS declared for 9MFY26 to 7.4sen (9MFY25: 7.1sen).
YoY. 3QFY26 CNP declined 12.7% YoY to RM64.3m, mainly due to softer consumer demand, which also led to a marginal 0.4% YoY decline in revenue. In addition, operating expenses rose 7.9% YoY, driven partly by higher depreciation charges and the implementation of service tax on rental expenses following the July 2025 SST scope expansion, resulting in weaker operating leverage during the quarter.
QoQ. 3QFY26 CNP surged 36.7%, supported by a 29.0% increase in revenue driven by stronger festive spending during the Chinese New Year and Hari Raya period. Gross profit margin remained stable at approximately 40%, likely supported by stronger contribution from higher-margin in-house brands and sportswear-related products.
Outlook. We expect 4QFY26 earnings to moderate sequentially following the strong festive-driven demand recorded in 3QFY26, as consumer spending typically normalises post Hari Raya and Chinese New Year. In addition, softer sales momentum and higher promotional activities could weigh on operating leverage and margins during the quarter. Management also highlighted that the retail sector remains challenging amid weakening consumer purchasing power due to rising living costs, ongoing trade tensions, as well as elevated inflation and interest rate environment. Nevertheless, we believe downside risks remain manageable, supported by Padini’s strong value-for-money positioning, resilient brand equity and defensive mass-market customer base.
Earnings Revision. Despite 9MFY26 earnings accounting for 93% of our full-year forecast, we keep our FY26F–FY27F earnings estimates unchanged at this stage, as we expect a seasonally softer 4QFY26 amid post-festive demand normalisation and weaker operating leverage.
Valuation & Recommendation. We maintain our HOLD call on Padini Holdings Berhad with a lower TP of RM1.45 (from RM1.80), after rolling forward our valuation base to FY27F. Our TP is based on a lower target P/E of 10.5x FY27F EPS of 13.8sen (from 12.3x FY26F EPS of 14.6 sen), representing below -1SD of its 3-year forward P/E mean. We believe the lower valuation multiple is justified by weaker consumer sentiment, softer discretionary spending outlook, persistent cost pressures and limited near-term rerating catalysts for the retail sector. In addition, lingering sentiment overhang arising from the ongoing investigation may continue to weigh on near-term valuation rerating.
Risk. Forex volatility may result in higher material sourcing and freight costs.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.955678 | 3.983535 |
| EUR | 4.617050 | 4.621850 |
| CNY | 0.585177 | 0.585795 |
| HKD | 0.504786 | 0.508370 |
| SGD | 3.095618 | 3.117454 |