The key FBM KLCI fell briefly below the crucial 1,600 level in afternoon trade on Monday on mounting selling pressure in line with the key Asian markets.
KUALA LUMPUR: Padini Holdings Bhd
came under strong selling pressure in early Friday trade, falling 40 sen or 7.25% to RM5.12 within five minutes of the opening bell.
Kenanga research cut Padini's target price to RM4.90 from RM5.60 previously as the latter's 1Q19 core net profit of RM18mil came in below estimates. It maintained its underperform rating on the counter.
The research house said Padini experienced lower-than-expected sales and margin. Core net profit plunged 69% quarter-on-quarter with sales dropping 31% as it was unable to match the seasonally stronger Hari Raya festive season sales in the previous quarter despite the zero-rated tax holiday sales.
Pre-tax profit margin aso contracted due to a rise in staff cost, rental and other store operating expenses such as absorbing SST in September.
"Moving forward, we expect the earnings momentum to be limited by: (i) higher costs from the new SST, (ii) the gestation periods for its Cambodian and Thailand operations, which are expected to incur higher start-up costs than Malaysian ones, and (iii) weakening in MYR against major currency (i.e. USD and RMB).
"Besides, we also understand that group would bear the SST cost (if less than 10% of total cost) to maintain consumer demand for its well-known affordable products range," said Kenanga
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