HLG: 30 May 2008 Padini Holdings Bhd - Strong domestic sales; Maintain BUY
Padini Holdings Bhd BUY
Price target RM4.40
Share price at 29 May RM3.16
Investment summary
Q308 results were 22% above HLG/consensus, and re-affirms our BUY rating on the stock. We still like Padini given: (1) short-term domestic growth driven by same-store sales growth and store expansion; (2) its retail franchise expansion overseas could provide the next leg of growth; (3) cheap valuations vs. regional peers, at FY08 PE of 9x with 3-year EPS CAGR of 26%.
We are neutral on Malaysia’s consumer sector, given the looming inflationary pressure offsetting GDP growth and public sector pay hikes. For sector exposure, we prefer mass-market retailers, rather than makers of big-ticket items (eg. cars, housing, white goods).
Results beat the Street
Share price has risen +30% since our initiation in Aug07, but we still believe there is sufficient upside to retain a BUY: (1) quarterly EPS continues to beat the mkt; (2) valuations are still just half of its HK peers, despite regional brand scalability.
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Saturday 21 June 2008
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