Padini: Upleg May Begin Now

Padini has finally surpassed the resistance from the horizontal line at RM3.90-3.92 as well as the psychological RM4.00 resistance. With these double breakouts, Padini is poised for its upswing. For more on this stock, check out my result update here.

Chart: Padini's daily chart as at April 15, 2019_12.30 (Source: Malaysiastock.biz)

Padini: Earnings Plunged

Result Update

In QE30/9/2018, Padini's net profit dropped 69% q-o-q or 42% y-o-y to RM18 million while revenue was mixed- down 31% q-o-q but rose 5% y-o-y to RM330 million. Revenues and profit before taxation for this quarter decreased by approximately RM148 million (31.0%) and RM54 million (66.9%) respectively compared to the immediate preceding period. This was mainly due to Hari Raya festival sales which fall in June 2018 and the nationwide 4 days special sales promotion held in the last quarter.


Table 1: Padini's 8 quarterly results

The Hari Raya festival sales and the nationwide 4 days special sales promotion must have been so successful as it came after the ending of GST in Malaysia in June. The following quarter, QE30/9/2018 has traditionally been a slower quarter, and it did not benefit from the tax-free period after the end of GST and before the start of SST in September. It could be a reflection of the slowdown in consumer spending.

Below I have compared the decline in revenue and profits for QE30/9/2018 with those of QE30/9/2018. While revenue dropped q-o-q buy rose y-o-y for both periods under review, profits dropped more severely for QE30/9/2018 compared to QE30/8/2017. The reason for the bigger drop in profits are attributable to:

a) a drop in gross profit margin from 43% to 40%, which was mainly due to the reversal of inventories written off and inventories written down in the previous financial year, and
b) an increase in staff cost, rental and some other store operating expenses.

Table 2: Padini's QE30/9/2018 compared to QE30/9/2017 


Graph: Padini's P&L  for last 25 quarterly results

Financial Position

Padini's financial position is deemed satisfactory as at Sept 30, 2018 with current ratio at 3.7x and gearing ratio at 0.3x. Net cash balance was RM314 million or RM0.48 per share.

Valuation

Padini (closed at RM4.30 in the morning session) is now trading at a trailing PER of 17x (based on last 4 quarters' EPS of 25 sen). Excluding the net cash of RM0.48 per share, Padini's PER would improve slightly to 15x. At either one of these PERs, Padini is fairly attractive.

Technical Outlook

Padini broke its horizontal line at RM5.30 as well as the psychological RM5.00 mark on November 30. Its immediate support is at the horizontal line at RM4.10-4.15. If this support is broken, Padini may test its uptrend line at RM3.70.

Chart: Padini's weekly chart as at Dec 4, 2018_11.30 (Source: Malaysiastock.biz)

Conclusion

Despite the sharp drop in profits, Padini is still a good stock to buy for long-term investment based on its steady & well-established track record of financial performance and healthy financial position.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Padini: Earning Soared

Result Update

for QE30/6/2018, Padini's net profit rose 44% q-o-q or 45% y-o-y to RM57 million while revenue rose 12% q-o-q or 4% y-o-y to RM478 million. Revenue increased mainly due to increased number of outlets, which increased by 5 Padini Concept stores and 7 Brands Outlet stores opened during the twelve-month period under review.  Profit before tax also increased as a result of the impact from the increase in revenue and improvement in GP margin, counter balance by the increase in selling & distribution expenses.


Table: Padini's 8 quarterly results

We can see clearly that Padini's net profit was way above the net profit achieved in QE31/12/2016. The acceleration in net profit could herald a new phase of earning growth for Padini.


Graph: Padini's P&L  for last 18 quarterly results

Financial Position

Padini's financial position is deemed satisfactory as at June 30, 2018 with current ratio at 2.9x and gearing ratio at 0.4x. Net cash balance was RM414 million or RM0.63 per share.

Valuation

Padini (closed at RM6.04 yesterday) is now trading at a trailing PER of 22x (based on last 4 quarters' EPS of 27.11 sen). Excluding the net cash of RM0.63, Padini's PER would improve slightly to 20x. At either one of these PERs, Padini is fairly attractive.

Technical Outlook

Padini is in a long-term upward channel. It is now pressing against the upper line, which is likely to cap its upside in near term.


Chart 1: Padini's monthly chart as at Aug 27, 2018 (Source: Shareinvestor.com)

The weekly chart shows potential weakness ahead but the share prices will be well-supported by the intermediate uptrend line, SS at RM5.00-5.20.


Chart 2: Padini's weekly chart as at Aug 27, 2018 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance and satisfactory financial position, and positive technical outlook, Padini is a good stock to buy for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Padini: Possible Bullish Breakout

Padini may have a bullish breakout at RM3.65. Its immediate target could be RM4.00. For those who are keen to trade this breakout, I would suggest that you stagger your entry by buying in 2-4 tranches between RM3.70-3.80. A pullback to RM3.70 is possible but a drop below the breakout level of RM3.65 should be a warning that the play is over. (Note: Padini is at RM3.75 as ta 4.40pm.)


Chart: Padini's daily chart as at July 18, 2017_4.30pm (Source: Shareinvestor.com)

Padini: Earnings Soared

Result Update

for QE31/12/2016, Padini's bet profit rose 90% q-o-q or 65% y-o-y to RM54 million while revenue rose 38% q-o-q or 25% y-o-y to RM427 million. Revenues rose sharply q-o-q due to the Christmas season and the year-end school holidays. Operating expenses did not increase proportionately to the increase in revenue, resulting in the q-o-q improvement in profit before taxation by 83% (RM33.1million).


Table: Padini's 8 quarterly results

We can see clearly that Padini's net profit was way above the net profit achieved in QE31/12/2015. The acceleration in net profit could herald a new phase of earning growth for Padini.


Graph 2: Padini's P&L  for last 18 quarterly results

Financial Position

Padini's financial position is deemed satisfactory as at Dec 31, 2016 with current ratio at 2.1x and gearing ratio at 0.7x.

Valuation

Padini (closed at RM2.58yesterday) is now trading at a trailing PER of 11x (based on last 4 quarters' EPS of 23.65 sen). At this PER, Padini is very attractive.

Technical Outlook

Padini has broken above its intermediate downtrend line, RR at RM2.40 last week. MACD has hooked up and it could well re-enter the positive territory again. This would signal the co nitnuation of its prior uptrend.


Chart 1: Padini's weekly chart as at Feb 20, 2017 (Source: Shareinvestor.com)

From the monthly chart, we can see that Padini is still in a long-term uptrend line with support at RM2.20.


Chart 2: Padini's monthly chart as at Feb 20, 2017 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance and satisfactory financial position, attractive valuation and positive technical outlook, Padini is a good stock to buy for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.