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About Padini, MEGB ...
Padini: It adopted more aggressive promotion and discounting activities to boost its sales at the expense of profit margin. However concerned are that these discounting activities will persist and become a long-term phenomenon to the group, especially as consumers are getting increasingly sophisticated due to the influx of international brands.
Furthermore, management reiterates that any contribution from its venture in Indonesia (Vincci) will be slow or insignificant to the group in the first two to three years, as it takes a conservative approach to penetrate the market (five new outlets per annum), which could only translate to 1% to 3% additional profit per annum to the group. As of Feb 2013, its master franchisee in Indonesia, FJ Benjamin has already opened one Vincci store in Jakarta, which has been generating decent sales since its opening in December 2012.
On the positive front, Padini has started selling its Vincci shoes in the e-commerce space via Zalora.com, an Asiaonline fashion store, which was set up in late 2011. Nonetheless, the group has yet to formulate any plans to monetize its well-followed facebook fans page, which has 365k followers as of today. Management reveals that there is no immediate plan to penetrate the e-commerce space on its own.
Regards to its brick and mortar business, there will be no new stores opening in financial year 2013. However, management has already identified five new outlets opening (three Brands outlets, two Padini concept stores) in financial year ending June 30, 2014, Gurney Paragon in Penang in mid-2013 and Imperial City Mall in Sarawak in second half of 2013 will have both Brands outlet and Padini concept store each while another Brands outlet will be opened in a mall in Seremban in the second half of this year.
In view of intensifying price competition among fashion retailers and increasingly cautious retail sentiment, Padini's financial year 2013 to 2015 earnings per share estimates to drop. The drop in earnings is mainly attributed to lower same-store sales growth assumption for Brands outlet in financial year 2013, from 20% year-on year (y-o-y) to +10% y-o-y, and margin compression due to stiff competition.
MEGB:It plans of employing an asset-light strategy by hiving off its properties is nearing fruition. The plan includes using the proceeds from the sale to retire borrowings and return some cash to shareholders.
The total current (Feb 2013) value of MEGB's properties was just under RM350mil, with the total book value at about RM245mil as at June 2012.
Source said that an interested buyer was planning to make an offer of around RM250mil for all the properties. The company's properties include its campuses in Kuala Lumpur, Selangor, Perak and a few other states, as well as some parcels of vacant land nationwide. MEGB's largest parcel of land by book value RM39.4mil is in Bangi, Selangor.
News of MEGB wanting to dispose of its properties as part of its strategy to become asset light and settle its debts is not entirely new, given its financial status. As at June 2012, MEGB's total debt stood at about RM67mil.
While the numbers looked healthy in financial year 2010, MEGB'S earnings were significantly different just a year later, mainly owing to low student intake and higher-than-expected staff costs. For its third quarter ended Sept 30, MEGB posted a net loss of RM7.65mil on revenue of RM35.03mil.
In October 2012, the company announced a transformation plan which it said would focus on equity participation, revamping business model, enhancing academic offerings, partnerships with local and foreign institutions, an offshore branch campus, franchising, marketing and also the acquisition of another university to complement its existing business, subject to further negotiations and final approvals.
Since then, it has been given the nod by the Higher Education Ministry to run a new programme (bachelor of pharmacy) and has signed a memorandum of understanding with The University Court of Edinburgh Napier University to explore opportunities for a branch campus here.
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