Padini's expansion plans on track

The company said in a Bursa Malaysia filing that revenue grew 20.71% to RM342.36mil, boosted by new stores including an additional five Padini Concept and eight Brands Outlet stores.

KUALA LUMPUR: Padini is on track for its new Cambodian venture in FY6/18 and intends to maintains its existing business strategies and expansion plans in Malaysia, says Maybank IB Research.

The research firm has raised FY18-20 earnings forecasts by 2% to 5% after imputing higher new outlet assumptions. It maintains its Hold call on the stock with target price increased by 15 sen to RM4.20 based on a valuation of 15x CY18 PER (from 15x FY18PER).

Padini's plans to open three new outlets in Phnom Penh, consisting of two Padini Concept Stores and one Brands Outlet, with a capex of RM20mil. These stores have yet to be factored into Maybank IB Research's forecasts as it expects earnings contribution to be minimal in the initial period. 

In Malaysia, Padini is planning 12 new outlets in FY18. 

"We raise FY18/19/20’s earnings forecasts by 2%/5%/5% after imputing: (i) higher new outlet assumptions of 12/8/8 stores (prev: 8/6/6 stores), and (ii) marginally lower gross margin of c.-1ppt p.a. in anticipation of higher material costs," said Maybank IB Research.