MIDF Research maintains its “buy” recommendation on Padini Corp Bhd, with a target price of RM2.26.
MIDF said Padini has attractive dividend yield of 6.5 per cent and commendable revenue growth backed by aggressive expansion.
“Aggressive new store expansion to continue in the financial year (FY) 2015. Management guided us that its store expansion is set to continue in FY15 after five Padini concept stores and seven brands outlet stores had been successfully added into the company’s stable in FY 2014.
“Padini had recently opened its brands outlet store on June 28 in Aeon Taiping, which marks its first new store opening for FY 2015. We are fairly positive on the expansion momentum as we believe that it will contribute generously towards the company’s top line moving forward,” MIDF said in its note.
The company is also expected to regain its syariah-compliant status in November. It was taken off the Securities Commission’s list during the May review as more than 33 per cent of its cash were placed with conventional banks. This had sparked a sell down on its shares.
“However, the company had highlighted to us that it had addressed the issue by reallocating a portion of its cash into Islamic instruments in order to be in compliant with the requirement of the SC’s list.
“Syariah-status of the company should be reinstated in November, which may see the return of syariah investors,” MIDF said.
