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Padini (7052) 2015

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Stock Analysis: on historical financial result & stock valuation.
Bursa Malaysia: Padini Holdings Berhad

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Padini (7052) 2015

  1. 1. Padini Holdings Berhad (Bursa 7052) Investment Analysis • Growth & Profitability • Operations & Cash Flow • Risk and Gearing • Valuations Chen Tong www.financialplanningmalaysia.com
  2. 2. 475 521 568 723 790 866 978 50 61 76 96 85 91 80 81 111 31 77 162 52 192 0 50 100 150 200 250 0 200 400 600 800 1,000 1,200 FYE 2009 FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 Millions Revenue Millions GrowthTrend Revenue PAT Net cash fr op. • 11% YOY revenue growth since 2012 • 6% net profit YOY contraction (ALERT) • 36% YOY growth of cash flow from operations • Financial year end is 30 June 2015 • Par value at RM0.10 • RM80 million net profit FYE June 2015 • * YOY stands for year over year 10% 9% 27% 9% 10% 13% 23% 24% 27% -11% 6% -12% 38% -72% 149% 111% -68% 270% -100% -50% 0% 50% 100% 150% 200% 250% 300% FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 Growth Rates Revenue Growth PAT Growth Cash fr Op Growth
  3. 3. 26.7% 29.3% 27.9% 31.3% 27.4% 27.7% 28.3% 49.1% 50.2% 51.2% 48.2% 46.7% 46.2% 43.2% 10.4% 11.7% 13.3% 13.3% 10.8% 10.5% 8.2% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% FYE 2009 FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 Profitability Eff. tax rate Gross Profit Margin Net profit margin • Profit margin deteriorate since 2012 to single digit 8% (ALERT) • Still a fair profit margin for listed company • Due to pricing & competition pressure. • The competitive landscape & economic environment had on profit margin, as explained in Padini’s Quarterly Report “…For the time being, at least over the medium term, this should be the new normal.”
  4. 4. 3. Operations • Consistent use of working capital for inventory & debtors • A low & consistent IDLC (Inventory, Debtors less Creditors) usually represent well-managed operations • It also indicates a real & authentic net profit number (real cash generated) 33 33 39 48 50 55 51 92 77 171 192 144 222 169 (38) (59) (94) (79) (89) (114) (142) 87 50 116 161 104 163 77 (200) (150) (100) (50) 0 50 100 150 200 250 300 FYE 2009 FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 Millions Inventory, debtors&creditors(MYR 'million) Trade debtors Inventory Trade creditors IDLC 139 108 225 187 125 174 111 25 23 25 24 23 23 19 57 82 123 77 77 89 9367 35 75 81 48 69 29 0 50 100 150 200 250 FYE 2009 FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 TurnoverinDays Inventory, debtors&creditor turnover (days) Inventory Turnover Debtor Turnover Creditor Turnover IDLC Turnover
  5. 5. • Operations generated good cash flow • In 2005, cash generated from operations is RM192 million • RM43 million used on capital expenditure • RM66 million paid as dividend • RM34 used to buy short terms investments like unit trust • Net cash increased by RM53 million 81 111 31 77 162 52 192 (22) (28) (24) (28) (16) (42) (43)(18) (18) (33) (53) (53) (76) (66) 2 20 (2) (10) (61) (34) (40) (65) 7 5 (83) 125 (53) (250) (200) (150) (100) (50) 0 50 100 150 200 250 FYE 2009 FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 Millions Source & Applicationof Cash Net cash fr op. Capex Dividend Paid Investment Net Cash/ Debt Movement
  6. 6. • Net cash & short term investment, after net off all borrowings, is RM207 million • EDR with 100% equity 0% net debt. (Gearing is 0) • No borrowing risks. Can ride through bad time. 204 234 283 340 372 388 406 100% 100% 100% 100% 100% 100% 100% 0% 0% 0% 0% 0% 0% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 50 100 150 200 250 300 350 400 450 FYE 2009 FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 Millions Equity Debt Ratio S/hs’ equity Net Debt Equity % Debt % 19 20 0 2 12 74 10966 135 139 138 206 97 137 (29) (26) (25) (31) (19) (37) (26) (3) (10) (22) (20) (17) (15) (13) 53 119 92 89 183 119 207 (100) (50) 0 50 100 150 200 250 300 FYE 2009 FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 Millions Cash, Equivalent & Borrowings ST Investment Deposit & Cash ST Borrowings LT Borrowings Net Cash Equivalent
  7. 7. • 2015 price range is between RM2.01 & RM1.33 where PERs are between 16.5x & 10.9x • This graph gives a good gauge on price range 3.58 4.30 1.35 1.94 2.37 2.13 2.01 2.25 2.39 1.00 0.82 1.69 1.58 1.33 1.55 1.78 0.43 0.52 0.57 0.59 0.62 - 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 FYE 2009 FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 Share Price Highest price Lowest price Average price Closing price NA/share
  8. 8. • 12x is a fair PER in this market conditions without evidence of EPS growth • In a better market outlook scenario (not now), 15x should be reasonable • Consistent dividend pay out • At RM1.34, the dividend yield is 7.5% which is good. DPS is growing every year except for 2015. DPS’s YOY growth is 25.7% since 2011 11.7 13.3 18.3 15.4 16.5 8.7 5.6 13.0 11.4 10.9 10.2 9.5 15.6 13.4 13.7 9.2 12.6 14.6 14.3 11.0 0.1151 0.1459 0.1298 0.1382 0.1219 0.1000 0.1200 0.1400 0.1600 0.1800 0.2000 0.2200 0.2400 - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 EPS PE Ratio High PE Low PE Avg PE PER EPS 3.0% 3.1% 3.4% 5.4% 5.0%4.0% 7.3% 4.7% 7.3% 7.5% 3.4% 4.3% 3.9% 6.2% 6.0% 3.77% 3.26% 4.23% 5.84% 7.46% 0.0400 0.0600 0.0800 0.1150 0.1000 0.0000 0.0500 0.1000 0.1500 0.2000 0.2500 0.3000 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 DPS Dividend Yield Low DY High DY Avg DY Div Yield DPS
  9. 9. • Fair price range between 1.30 – 1.60. Lower is bargain. • Dividend yield 6.3% & above • Good chance of capital gain in medium term (1 – 2 years) • Key risks are the deteriorating profit & profit margin trend & broad economy downturn & GST had on festive seasons EPS DPS Est Growth Fair price @ PE 15 0.1219 0.1000 2.0% 1.83 Date: 15/9/2015 Price Price (MYR) PE Ratio Dividend Yield Dividend return * Capital gain ** 2.10 17.2 4.8% 6.8% -12.9% 2.00 16.4 5.0% 7.0% -8.6% High 1.90 15.6 5.3% 7.3% -3.8% 1.80 14.8 5.6% 7.6% 1.6% 1.70 13.9 5.9% 7.9% 7.6% 1.60 13.1 6.3% 8.3% 14.3% Fair 1.50 12.3 6.7% 8.7% 21.9% 1.40 11.5 7.1% 9.1% 30.6% 1.30 10.7 7.7% 9.7% 40.7% Bargain 1.20 9.8 8.3% 10.3% 52.4% 1.10 9.0 9.1% 11.1% 66.2% 1.00 8.2 10.0% 12.0% 82.9% Notes: • Report dated 15 Sep 2015 (Share Price RM1.35) • Financial year end is 30 June 2015 • Par value at RM0.10 • Valuation is subjective, it changes constantly when new information available, i.e. announcements, quarterly report http://stockinvesting.financialplanningmalaysia.com/ * Dividend Growth model with dividend growth at 2% ** Based on fair price in normal market conditions when PE is 15

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