MAYBANK IB Research has cut Padini Holdings Bhd’s earnings estimates by 8-18% for the company’s financial year 2020-2021.
The research firm said this is to impute for the prolonged store closures and gradual recovery in sales post-Movement Control Order (MCO).
Nevertheless, it believed that negatives have been priced in following a 28% share price correction year-to-date (YTD).
“We maintain our buy call with a lower target price (TP) of RM2.80 (-30%) given a potentially slower economy in the near term,” Maybank IB Research said in a note today.
In the note, it said the garment company is not allowed to operate during the MCO as it is a non-essential service. However, labour and rental costs are still being incurred as no final decision has been made by its landlords in regards to a possible rental waiver.
The research firm made unchanged estimates to the company’s FY2022 earnings estimates.
It also expects third quarter FY20 earnings to be sequentially weaker given the impact from the MCO but partially buffered by higher Chinese New Year sales in January 2020.
“Key earnings risk will arise in 4QFY20 given only two months of store operations (May and June) and this will further exacerbate if the MCO is extended beyond April 28,” it added. — April 17, 2020, Bernama
