Padini shares up 12% after group announces firmer earnings, dividend

-A +A

KUALA LUMPUR (Feb 28): Shares in Padini Holdings Bhd surged as much as 41 sen or 11.7% to RM3.92 today, after the fashion retailer announced a third interim dividend in addition to firmer quarterly earnings.

At 3.24pm, the stock was trading at RM3.90 — still up 39 sen or 11.11% from its last price of RM3.51 — making it the second biggest gainer on the local bourse so far. At its current price, Padini has a market capitalisation RM2.55 billion.

Some 5.56 million shares crossed, sharply higher compared with its 200-day average trading volume of 997,493 shares.

Yesterday, Padini said its net profit grew 6.47% to RM53.2 million or 8.09 sen per share in the second quarter ended Dec 31, 2018, from RM49.97 million or 7.6 sen a share a year earlier, thanks to higher sales generated from the opening of four new stores.

Quarterly revenue was up marginally by 0.47% to RM462.58 million from RM460.43 million previously.

Padini declared a third interim dividend of 2.5 sen a share, payable on March 29, bringing its cumulative dividend to 7.5 sen, which is equal to the corresponding period in FY18.

MIDF Research said Padini's earnings for the first half of FY19 so far is within its and the consensus' expectations.

The research firm has upgraded the stock to "neutral", after its share price retreated 36% since its "sell" recommendation in November 2018.

The target price on the stock was, however, lowered to RM3.59, from RM4.08.

"We re-rated the stock as we expect a subdued earnings growth in the near term due to the saturated fashion market. The assigned price-earnings (PER) multiple is -1.0 standard deviation below the group's one-year average historical PER.

"We believe that all negativity has been priced in at the current valuation. All things considered, we are upgrading our recommendation on the stock to neutral from sell previously," its analyst wrote in a note today.