KUALA LUMPUR (May 29): Padini Holdings Bhd shares fell 5.01% this morning after its 3QFY19 net profit declined 13% to RM34.65 million from RM39.78 million registered a year prior, due to narrower gross profit margin. Quarterly revenue grew by 11.5% to RM474.19 million from RM425.27 million posted a year prior, due to sales from four new stores opened in 4QFY18.

At 9.05a, Padini fell 20 sen to RM3.79 with 4,300 shares done. The stock had earlier slipped to a low of RM3.76.

For 9MFY19, the group’s net profit declined 12.5% to RM105.82 million from RM120.97 million a year ago, with revenue growing 5.5% to RM1.267 billion, from RM1.201 billion. Notwithstanding the weaker results, the group announced a fourth interim dividend of 2.5 sen, and a special dividend of 1.5 sen for FY19, payable in June.

Meanwhile, Kenanga IB Research downgraded Padini to “Outperform”  (OP) at RM3.99 with a lower target price (TP) of RM4 (from RM4.25) and said Padini’s 9M19 core net profit of RM105.7 million (-13%) came below house expectation at 60%, but appears to be in line with the consensus at 71% of full-year estimate.

In a note today, the research house said its negative variance was due to the lower-than-expected gross profit margin and higher-than expected effective tax rate.

“This was despite a better festive season sales contribution.

“As such, we cut our FY19-20E CNP by 14-6%. Downgrade to MP from OP with a lower TP of RM4.00 (from RM4.25),” it said.