PADINI Basic Analysis @ 16 April 2018

PADINI Basic Analysis @ 16 April 2018

The ROE is more than 20% which is consider very good. However, last 4Q ROE is getting lower and lower as compared with FY2016 and FY2017.

The high ROE % were due to high asset turn-over and high leverage. Net Profit was not the main factor.

The quality of Total Shareholders equity were excellence! More than 85% were from Retained Earnings.

PADINI still manages to pay dividend DY 4%, even through with high Retained Earnings. This is very amazing.

A strong operational efficiency company, where low inventory days and low receivable days. The Operating Cash Flow/Net Profit is more than 140%. In overall, a strong cash flow company.

Low debt ratio with high interest coverage. A healthy financial company.

In general, high ROE % and strong cash flow. It is a strong fundamental company.

Last 5 years historical average PE around 12.4X. Last 5 years highest PE around 18.2X.

For last 4Q, highest PE = 23X, lowest 14.6X and now trade at 19X.

Last Quarter Report gave EPS 0.08. However, I will expect a lower EPS for coming QR.

No doubt, PADINI is a strong fundamental company. 

However, based on current economic situation and historical PE , current PE 19X is over-valued. If the upcoming QR does not give EPS more than 0.05, the share's price will be declined immediately.

I will give PE 15X as fair value for PADINI, which is around RM3.60 based on last 4Q EPS.

Therefore I will patiently wait....

Disclaimers:

The raw data are extracted from internet without further validation. 

Readers are advised to refer to the official published financial figures of the mentioned listed company. 

This post is intended for educational purposes. This is not a buy/sell/hold call. Trade at your own risk.