FUNDAMENTAL OD FINANCE

BBA 4053

NAME OF GROUP MEMBER NURJAHAN MUNNI (201701627)

SOFIA MASALAEH (201701914)

ASSIGNMENT TITLE PADINI HOLDINGS BARHEAD

COURSE NAME FUNDAMENTAL OD FINANCE

LECTURER NAME SIR ROSLAN

 TABLE OF CONTENT

No Title Page

1 1.0 Introduction 3
1.1 History of the Company 3-4

2 2.0 Ratio 5
2.1 Liquidity Ratios 5

Current Ratio 5

Acid test Ratio 5-6

2.2 Debt Ratio 6
Total Debt 6

Times Interest Earning 7

2.3 Profitability Ratio 7
Gross Profit Margine 8

Net Profit Margin 8

ROA 8
ROE 8

2.4 Valuation Analysis 9

Price Earnings 9

3 3.0 Stategy Direction 10

4 4.0 Conclusion 10-11

5 5.0 Reference 12
1.0 INTODUCTION

Padini Holdings Berhad (Padini) was incorporated in 1971. Before venturing into trading,
distribution and retailing Padini started its business in manufacturing & wholesaling. Padini is
the largest domestic apparel retailer. Padini is one of Malaysia‟s most profitable retail companies
with 7 main brands, catering to virtually all segments of the Malaysian market, making it a
resilient proxy to the retail industry. Mr Yong Pang Chaun, whom is the currentmanaging
director and also a substantial shareholder with a 44.0% stake, is also the founder of the group.
The group has developed their retail business for the low to middle incomelevel over the years.
Started life as a manufacturer and supplier of garments around the early 70‟s, the group then
made inroads into the retail scene some years later with its diversified flagship brand. Padini has
over 41 years under its belt and is still going strong until now.

Padini began operations as Hwayo Garments Manufacturers Company in 1971, it was affiliated
in garment manufacturing and wholesaling. It entered the retail industry in 1975with flagship
brand Padini. VINCCI was established to market ladies' shoes, bags, belts and other accessories
in 1986. Many brands including Miki and Speed and PADINI AUNTHENTICS labels were
launched in the following decades. In 1991, Home Stores Sdn Bhd was launched to hold all the
companies involved in the Group's retail, wholesale and manufacturing businesses. It was
subsequently renamed to the present Padini Holdings a year later. In 1995, Padini Holdings Sdn
Bhd was converted to a public company limited by shares and adopted the name, Padini
Holdings Berhad and soon listed on the Second Board of the then Kuala Lumpur Stock
Exchange. The year 2000 witnessed the establishment of Padini.com Sdn Bhd to provide
electronic business services and solutions for the group. Padini Holdings was transferred to the
Main Board of the KLCI Bushra Malaysia in 2005.

1.1 BACKGROUND HISTROY

Padini Holdings Berhad was originally found in Malaysia. The company sells both mens' and
ladies’ shoes and accessories, garments, ancillary products, children’s garments, maternity wear
and accessories through various subsidiaries. Its most prominent brands are Padini and VINCCI.
Its goods are exported to mainly Asian countries. Its goods are sold in retail flagship stores and
concept stores. The Padini Concept Store is a concept which houses all Padini Holdings brands
less than one roof or “one -stop- shopping”. The first of such outlets was opened in 1 Utama,
Malaysia in the mid 2000's. Padini Holdings Bhd focuses on fast retailing, where new products
come online within weeks.

Padini address consumers which are conscious of fashion and for entire ages and both sexes from
nine dissimilar brands: Padini, P&Co, Vincci, Padini Authentic, Seed, Miki Kids, Vincci
accessories, PDI, and Miki maternity with own philosophy for accessories, which entails an
inclusive range of the products targeted at the anticipated consumers. Subsequent to attain
victory in spreading the names of its brands in the perception of consumersof Malaysia, Padini
is shifting to revolve its copious labels inside regionally-recognized trendleaders. Padini is
putting efforts to fulfill the impending of the export market, majorly in theregion of Area,
and additionally, Padini will step up abroad advertising for its productions. Vision of
“PADINI HOLDINGS BERHAD” Padini affirms, “ Their vision is to be the marketplace leader
inside the retail industry”. They will attain the aim from hard work and attempts, creative and
discipline endeavor. In bigterms, Padini will carry on to sustain their elevated standard of
manufacturing and designquality together with affordability. In addition, they are also
operating for extending the trade on provincial base. Currently, they hold a mounting
existence in their neighbor nations, and this isjudged that there exists grand scope or potential
for the progression. Mission “PADINI HOLDINGS BERHAD” Padini set up its mission to
construct convincing and realistic products those meet outnecessities of the target
consumers although go beyond their anticipation.

Padini is a Malaysian-domiciled investment-holding company headquartered inHicomGlenmarie

industrial park, Shah Alam. Incorporated in 1971 as proprietorship underthe trade name Hwayo
Garments Manufacturers Company, Padini was initially engaged in the manufacture and
wholesale of ladies wear. The company subsequently added men’s andchildren’s lines to its
offerings when it established its first three brands from 1975 – 1987. In1988, Padini discarded its
role as wholesaler to take up the role of consignor. Thereafter, thefirst single-brand store
distributing Seed was opened in 1992 in Sungei Wang Plaza, KualaLumpur.The company has
nine labels in its family of brands and retail in 330 freestanding stores, franchised outlets and
consignment counters in Malaysia and around the world. The company’s subsidiaries include
Vincci Ladies’ Specialties Centre Sdn. Bhd., which isengaged in dealing of ladies’ shoes and
accessories; Padini Corporation Sdn Bhd., SeedCorporation Sdn. Bhd., Yee Fong Hung
(Malaysia) SendirianBerhad (Yee Fong Hung) andPadini International Limited, which is
engaged in dealing of garments and ancillary products; Padini Dot Com Sdn. Bhd. (Padini Dot
Com), which is engaged in provision of management services, and Mikihouse Children’s Wear
Sdn. Bhd. (Mikihouse), which is engaged in dealingof children’s garments, maternity wear and
accessories.
Tizio was introduced to the public with the opening of its first outlet in Mid Valley Megamallin
Nov 2012 and subsequently in Paradigm Mall on 23 May 2013. Like almost all of the Group’s
Brands, Tizio was developed in-house by, and is registered to the group. Anticipatemore
presence from Tizio in the coming years as the brand has been slated to become an addition to
the group’s portfolio of core brands.
On 5 March 1998, the group was listed on the Second Board of Bursa Malaysia
SecuritiesBerhad (Bursa) and thereafter, transferred to the Main Board on 4 August 2004. The
Main andSecond Boards merged on 3 August 2009. Major shareholders of the group as at 8 July
2013 are Pang Chaun Yong with 44% and Skim Amanah Saham Bumiputera with 5.0%
2.0 RATIOS
2.1 LIQUIDITY RATIOS

10

6 2013
5 2012
4 2011

0
CURRENT RATIO ACID TEST RATIO

2011 2012 2013 COMMENT

The current ratio in 2013
shows the stronger position
CURRENT 2.54 3.2 3.4 related to 2012 and 2011
RATIO due to the increasing in
current asset. This ratio
increases 0.66 times, from
2.54 times in 2011 to 3.2
times in 2012. Even the
ratio in 2013 increased a
bit, the current assets of the
firm are still more than
twice the current liabilities.
It shows that the company
is considered to have good
short term financial
strength
The acid test ratio shown
ACID TEST the increases because the
RATIO 1.3 1.6 2.3 company can cover their
current liabilities with all
its current asset not include
 the inventories. The lower
the ratio the less financially
secure a company is in the
short term. The company
with a quick ratio of lower
than 1.0 is not sufficiently
able to meet their short
term but in 2013 the ratio
has increased to 2.3, it
shows that the company
can cover their current
liabilities.

2.2 DEBT RATIOS

100 2011
2012
0
2013
TOTAL DEBT 2013
TIMES INTEREST…
2012

2011

2011 2012 2013 COMMENT

Debt ratio for these three years
have differences amount. The
TOTAL DEBT 0.36 0.30 0.28 debt ratio makes indicate that
have similar in asset. In 2011
 uses more debt than 2012 and
2013, It shows that assets can
cover the ratio debt is justify.

In 2011 has the harshest ratio to

cover it interest expenses
TIMES 67.79 49.9 59.7 compare to 2012 and 2013.
INTEREST Resulting in higher interest
EARNING obligations that could reduce its
ability to meet financial
obligations.

2.3 PROFITABLELITY RATIO

60.00%

50.00%

40.00%

30.00% 2011
2012
20.00%
2013

10.00%

0.00%
GROSS NET PROFIT ROA ROE
PROFIT MARGIN
MARGIN
 FORMAT 2011 2012 2013 COMMENT
According to the ratio, in 2011
GROSS performed better than 2012 and 2013
PROFIT 51.75% 48.2% 46.82% in generate profit and it cost.
MARGIN The gross profit has decreased of
4.93 percentages between 2011 to
201. It shows that the management of
Padini doesn't have well control
system in its expenses in order to
generate more profit to its company
Padini was doing well in the year of
NET PROFIT 13.32% 13.27% 12.09% 2011 on profit before it interests and
MARGIN taxes but the following year has been
dropped significantly from 13.32%
to 12.09%. Hence, indicating that
expense other than cost of goods sold
are higher than 2012 and 2013
According to the ratio, in 2012 the
ROA 17.04% 19.8% 18.60% percentage is getting higher by 2.4%
from 2011 and It has dropped to
18.60% in 2013 from 19.8%. It
shows that the company is
ineffective in using it asset to
generate profile
In 2013 the Percentage is higher than
ROE 16.77% 18.22% 25.60% both year 2011 and 2012.That is
Padini's superior return on equity due
to its efficient use of asset to
generate
sales and the fact that Padini
benefitted from its use of more debt
financing or financial leverage.
Hence, the shareholders in 2013 can
gain more benefits compared to 2011
and 2012
2.4 VALUATION ANALYSIS

12

10

2013
6
2012
2011
4

0
PRICE EARNING

FORMAT 2011 2012 2013 COMMENT

Price earnings ratio of the year in
PRICE 3.84 3.73 3.56 2011 is higher than 2012 and 2013.
EARNING Therefore, the level of this ratio
indicates the degree of confidence
that investors have in the firm’s
future performance. The higher the
P/E ratio, the greater the investor
confidence
3.0 STATEGY DIRECTION

Padini began as a back end operations in Malaysia’s apparel industry, manufacturing, trading and
supplying garments to order for retailers and distributors. Today, padini has become one of the
most well knownon brands in Malaysia multributors garments industries. A brand leader in the
distribution and reading of its own fasion labels through more than 230 freestanding store,
franchises and consignment counters. Padini has also proudly carried the made in Malaysia
stamp abroad, with its product exports to Thailand, Brunei, Saudi Arabia, Philipines, Combodia,
India, Egypt, Oman, UEA, Indonesia and Syria.

Padini also has a small export business that contributes 9% of FY10 group revenue. The group’s
exports sales consist primarily of women’s footware to the Middle East, Thailand, Singapour,
Philipines, Indonesia, Brunei and Australia. Padini’s export business was unsolicited and
originated from foreign parties approching Management upon discovering vincci’s products. The
group’s export business is organised along the franchise model, which minimizes padini’s risk
exposure as the cost of setting up stores and operating expense are borne by the franchise model
which minimizes Padini’s risk exposure as the cost of setting up stores and operating expense are
borne by the franchisees. Padini earns a one off licensing fee and royalties in addition
tonmerchandise sales to franchisees.

Padini Holdings Bhd’s line of women’s shoes and accessories under its Vincci label would be
distributed in Indonesia under a 10-year deal. Its unit Vincci Ladies’ Specialities Centre Sdn Bhd
had on August 7, 2012 signed a master franchise agreement with FJ Benjamin, (Singapore) Pte
Ltd and PT Gilang Agung Persada of Jakarta. Under the agreement, FJ Benjamin, through its
associate PT Gilang Agung Persada, open 25 stores within five years in Indonesia. The Franchise
would see FJ Benjamin distributing trendy and affordable VNC women’s shoes and accessories
in Indonesia. VNC products are sold under the Vincci label in Malaysia and are produced by the
Padini Group.

4.0 CONCLUSION

PADINI indebtedness increased over the 2010-2011 period and is currently above the industry
average. Although this increase the debt ratio could be cause for alarm, the firm’s ability to meet
interest and fixed payment obligations improved to a level that out performs the industry. In
summary, it appears that although 2010 was an off year, the company-improved ability to pay
debts in 2011 compensates for its increased degree of in datedness. PADINI profitability relative
to sales in 2012 was better than the average company in the industry, although it did not match
the firm’s 2010 performance. However, PADINI net profit margin quite favorable when
compared to the industry average. The exceptionally high 2011 level of return on common equity
suggests that the firm is performing quite well. A look at market ratios is helpful in assessing
risk.
5.0 REFERENCES

1. https://klse.i3investor.com/servlets/staticfile/230531.jsp

2. https://klse.i3investor.com/servlets/staticfile/112781.jsp

3. https://klse.i3investor.com/servlets/staticfile/123635.jsp

4. http://en.wikipedia.org/w/index.php?title=PADINI_AUTHENTICS&action=edit&redlink
=1
5. https://www.scribd.com/document/230282506/Assignment-Padini-Holdings-Berhad-3-
Latest