During our recent tour of Vincci’s designer team office and
Padini warehouse, we got a sneak peek of Padini’s gorgeous Oct/Nov collections.
We like the company’s solid fundamentals and the fact that its expansion plans
are well on track. The impact of Malaysia’s implementation of a minimum wage on
Padini is marginal as it is cushioned by
a robust top-line. As its upcoming earnings are likely to improve in tandem
with its aggressive store expansion, we are raising our FY12 and FY13 forecasts
by 4.9% and 5.8% respectively. Maintain BUY, with a FV of RM2.13.
A special tour.
Last week, we visited Padini Holdings for a behind-the-scene tour of its Vincci
designer office and warehouse. We were among the lucky ones who got to view its
October and November shoe and bag collections in the Vincci showroom. Padini owns
3 warehouses at the Hicom Glenmarie industrial park. We also visited the company’s
apparel warehouse.
Minimum wage not an
issue. The minimum wage for Peninsular Malaysia has been set at RM900 while
that for Sabah and Sarawak is RM800. The private sector has been given a grace
period of 6 months to implement this policy. We believe this would have negligible
impact on Padini’s earnings because: (i) the company’s lowest wage is RM800 and
RM600 for West and East Malaysia respectively,
which is not too far from the prescribed minimum wages, and (ii) the
affected staff comprises <10% of the company’s 3k employees.
Still in talks with
FJ Benjamin. As we highlighted in
our previous report, the management is still in discussions with FJ Benjamin Indonesia
in relation to the Vincci (under the brand name ‘VNC’) franchise. The potential
collaboration would allow Padini to expand overseas, especially in the
relatively untapped market of Indonesia, by leveraging on the expertise of FJ
Benjamin.
Maintain BUY.
Padini will be opening another Brands Outlet at Fahrenheit 88 in Bukit Bintang
in FY13. The company also plans to launch a new line of children’s wear for its
Brands Outlets by year-end. We believe that the company’s upcoming quarterly
results are likely to be better than expected given its aggressive outlet
expansion. Assuming a stronger top-line, our FY12 and FY13 forecasts are
revised up marginally by 4.9% and 5.8% respectively. Maintain BUY, with a new
FV of RM2.13, as we roll over our valuation from FY12 to FY13. As the group’s performance has been encouraging, we expect
management to be more generous in dishing out dividends in the future.
Source: OSK188
No comments:
Post a Comment