Monday, 12 March 2012

HDBSVR upgrades Padini’s earnings, TP RM1.75

KUALA LUMPUR (March 12): Hwang DBS Vickers Research has upgraded the earnings for Padini and raised the target price to RM1.75.

It said on Monday that Padini’s store expansion plan for FY12 is more aggressive than it expected.

“As such, we raised our FY12-14F earnings by 6-9%. We also increased same store sales growth assumptions after a strong 1H12 result,” it said.

HDBSVR said Padini is a liquid and cheap proxy to rising affluence (civil servants pay raised recently by 7%-13%) and a resilient Malaysian economy, and hence, deserves premium valuation.

“As such, we raised our target PE to 12x from 10x CY12F EPS, which lifted TP to RM1.75. The company should be able to pay higher dividends (expect 6 sen DPS for FY12F, implying 4.2% dividend yield),” it said.

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