PADINI (7052) - Fundamental & Technical Analysis

Technical Analysis


(It is a purely personal view without shares recommendation)

- After a significant drop in shares price on Nov 30, 2018, it unable to recover the reduction in the past 8 months.

- We noticed PADINI shares price traded in consolidation phrase.

- If we are a speculator, we can set an entry point if PADINI shares price traded above EMA 5 or set an entry point at +/- RM3.150 with a clear cut loss +/- 5% below the entry point.

- On the other hand, if we are a dividend investor, we should wait for PADINI shares to reflect a re-bounce and traded above EMA 30 as an entry point.

- RSI/MACD showed bearishly and oversold with a high chance that RSI will dull status so PADINI shares price will trade lower low. Watch Up!

- Resistance level (2): RM4.105

- Resistance level (1) : RM3.649

- Support (1): RM3.150

Apparel/Footwear and Rel Products



- Refer to sub-sector record, PADINI shares price recorded moderate CU PE level at 12.030.

- A simple wording, if we invest RM1 in PADINI counter, we need to wait around 12 years+ to gain back our capital RM1.

- Meanwhile, PADINI shares price record highest ROE, 27.277% among peers.

Fundamental Analysis


a) Overview

- Based on the latest financial announcement, PADINI scored a good financial performance.

- Double-digit PE is normal in apparel/footwear products sub-sector

- Average ROE / Latest ROE more than 20% which able to lead PADINI to outperform peers.

- Furthermore, PADINI corporate value RM3.8902 is higher than its current price at RM3.260 on Aug 23, 2019.

- With latest 4Q financial announcement, PADINI management seen like unable to generate a better EPS/Profit Margin Ratio/ROA compare to last financial year.

- ROC reduced significantly from 22.8% to 2.1% mainly contributed by lower cash generated from operations due to higher inventory level in recent quarter position.

- It is not a red flag as long as PADINI able to catch up their revenue in end of Y2019 like Christmas /New Years Sales.

b) Market Prospect Ratios

- PADINI EPS recorded higher high in the past 4 years with a payout ratio at +/- 50%.

- It is a good counter for a value investor but we should aware to set a safe entry point for PADINI counter.

c) Profitability Ratios

- There is a significant drop in ROC due to inventories written activity and reversal of inventories written off and written down (RM23M) in previous years.

- We can't find any further explanation on the reversal of inventories written off at this moment.

- Growth rate of revenue and COGS reflect in line with its business conditions. They have a good control in COGS to match with lower generation of revenue.

d) Efficiency Ratios

- PADINI management was able to maintain good performance in the past 4 years with flat efficiency ratios.

- Furthermore, we noticed account receivables turnover ratio getting better and better which indicator PADINI have a great capacity to collect payment from their customer without given out a high volume of credit sales.

- This advantage will reflect in its Quick Ratio.

- In term of growth rate for AP/AR/Inventory, PADINI has seen like purchasing a high volume of inventories to prepare their high sales season in the end year.

- And PADINI able to enjoy longer credit term due to their business scale compare to the quick collection in the generation of their sales. Typical a golden money cow.

e) Liquidity/Solvency Ratios

- Negative in cash from operating activities Y2018 explained as above.

- Besides, we able to notice PADINI management is trying to reduce their short term and long term borrowing position in Y2018 with an increment growth rate of financing activities which lead better in debt ratio/equity ratio/debt to equity ratio.

- With lower borrowing level and less interest expense, it will able to let PADINI stay competitiveness in severe market conditions.

- We believe PADINI able to maintain their dividend payout in the future as better growth in liquidity ratios.


©2019 by Dividend Investor.