We visited Padini recently and gather that its collaboration with FJ Benjamin is on track. The first Vincci outlet under the brand name ‘VNC’ will be launched at the end of this year in Pondok Indah Mall in Jakarta. Nonetheless, the pace of opening new local stores is likely to slow down as fewer new malls come up. The group will be introducing a new shoe brand to replace the Vincci+ merchandiseserving the higher-end segment. Maintain NEUTRAL, with FV unchanged at RM2.22 based on 15x FY13 EPS.
Brands Outlet the eternal jewel. In FY12, the group was on an expansion spree as it opened 14 new stores – including six Brands Outlets – which boosted Padini’s earnings by 25.4% y-o-y. The company’s Brands Outlet is still the main revenue earner, registering robust same-store-sales (SSS) growth of >20%, followed by Padini Concept tore and Vincci, each with SSS growth of ~15%. Meanwhile, its new 20,000 sq ft Brands Outlet in Fahrenheit 88 opened last month. Going forward, the opening of new stores is likely to moderate given the space constraints arising from the limited number of new malls being developed.
VNC outlet debuts in Jakarta. In early August, Padini signed an exclusive 10-year master franchise agreement with FJ Benjamin Group to distribute Vincci women’s shoes and accessories under the brand name “VNC” in Indonesia. A total of 25 stores will be opened within the next five years through FJ Benjamin’s Indonesian associate, PT Gilang Agung Persada. The first outlet – in Jakarta’s Pondok Indah Mall (PIM) - will be launched by the end of this year. Being located in the wealthy Pondok Indah suburb of South Jakarta, the mall will cater to the affluent market. The contribution from Indonesia is expected to be minimal in the next two years given the low number of outlets. For now, Padini does not have any concrete plan to expand overseas and will continue to focus on the domestic market.
To unveil new shoe brand. The group will replicate the success of its Vincci brand by introducing a new brand catering to the higher-end market at the end of this year. In the meantime, the four Vincci+ stores targeting the luxury segment will be closed down eventually but we expect the impact on the bottomline to be negligible.
Maintain NEUTRAL. We believe Padini will still deliver decent results even though the competition among retailers remains intense, especially after the opening of the Swedish fashion retailer, H&M maiden store last weekend. Shoppers might be drawn to the new opening in the short term but we think Padini will still be able to defend its position with its extensive network throughout Malaysia. Given the limited share price upside, we are maintaining our NEUTRAL recommendation, with our FV unchanged at RM2.22.
Brands Outlet the eternal jewel. In FY12, the group was on an expansion spree as it opened 14 new stores – including six Brands Outlets – which boosted Padini’s earnings by 25.4% y-o-y. The company’s Brands Outlet is still the main revenue earner, registering robust same-store-sales (SSS) growth of >20%, followed by Padini Concept tore and Vincci, each with SSS growth of ~15%. Meanwhile, its new 20,000 sq ft Brands Outlet in Fahrenheit 88 opened last month. Going forward, the opening of new stores is likely to moderate given the space constraints arising from the limited number of new malls being developed.
VNC outlet debuts in Jakarta. In early August, Padini signed an exclusive 10-year master franchise agreement with FJ Benjamin Group to distribute Vincci women’s shoes and accessories under the brand name “VNC” in Indonesia. A total of 25 stores will be opened within the next five years through FJ Benjamin’s Indonesian associate, PT Gilang Agung Persada. The first outlet – in Jakarta’s Pondok Indah Mall (PIM) - will be launched by the end of this year. Being located in the wealthy Pondok Indah suburb of South Jakarta, the mall will cater to the affluent market. The contribution from Indonesia is expected to be minimal in the next two years given the low number of outlets. For now, Padini does not have any concrete plan to expand overseas and will continue to focus on the domestic market.
To unveil new shoe brand. The group will replicate the success of its Vincci brand by introducing a new brand catering to the higher-end market at the end of this year. In the meantime, the four Vincci+ stores targeting the luxury segment will be closed down eventually but we expect the impact on the bottomline to be negligible.
Maintain NEUTRAL. We believe Padini will still deliver decent results even though the competition among retailers remains intense, especially after the opening of the Swedish fashion retailer, H&M maiden store last weekend. Shoppers might be drawn to the new opening in the short term but we think Padini will still be able to defend its position with its extensive network throughout Malaysia. Given the limited share price upside, we are maintaining our NEUTRAL recommendation, with our FV unchanged at RM2.22.
Source: OSK
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