PADINI (7052) - PADINI: The Magical Vincci - Weng Hwa


This post is written to follow up my previous idea sharing dated on September 10, 2017, which is related to the Vincci PBT improved to 20.5% and became the most profitable segment in FY2017.

As Padini’s annual report FY2017 has released, I found that there is no large amendment in their audited accounts. The PBT of Vincci is MYR 55.6 million with its revenue of MYR 270.6 million in FY2017. Therefore I tried to reach out to their IR team regarding this matter again. However, according to the CFO Ms Sharon’s response, the basic improvement of Vincci profit margin is due its improvement in product quality and the fixed price point strategy they are implementing.

Being as an outsider, I do not have any evidence to comment whether the answer above from the management is a truth. Rather, I am more concerning about whether this Vincci’s PBT margin is sustainable. For this reason, I went through their annual report FY2017, my highlights for Vinnci is below.

     The non-performing Tizio label, which is under Vincci, was fully closed down in FY2017.
    The number of free-standing stores of Vincci is reduced to 18 in FY2017 (22 in FY2016; 27 in FY2015).

Although some setbacks mentioned above, Vincci was actually doing well in the export market in FY2017. Especially in the Indonesia market, the number of retail stores managed by licensees and dealers increased to 13 in FY2017 (10 in FY2016). As mentioned in the annual report, the export sales increased by about 50% or MYR 19 million compared to FY2016.

How long the Vincci’s magic can last? Being as a shareholder of this company, surely I hope the company can continue doing well to deliver higher value to the shareholders. Padini is in my watch-list, where I believe those companies will continue to be profitable and performing in long run in Malaysia. I have been holding Padini for more than 3-years. Sometimes the company may loss its growth momentum, such as it is happened in 2015, however I always hold longer view for them.

Never forget setting our investment time horizon. Long or short horizon, it is all about personal preference