Mr DIY's Q2 earnings outlook steady, shares trade discount

New Straits Times

7 days ago

KUALA LUMPUR: Mr DIY Group (M) Bhd's upcoming second-quarter results are expected to be in line with market expectations, supported by strong gross profit margins and continued outlet expansion, said RHB Investment Bank Bhd.
The home improvement retailer is scheduled to release its results on Aug 13, with net profit estimated at RM150 million to RM160 million, broadly unchanged from RM155 million a year earlier but down from RM174 million in the first quarter.
RHB analyst Soong Wei Siang said same-store sales growth is likely to moderate from the 0.6 per cent recorded in the first quarter of 2025 (1Q25) due to weaker seasonality and subdued consumer sentiment.
"On a more positive note, the heightened gross profit margin of 47.8 per cent in 1Q25 should hold up, driven by favourable foreign exchange trends and increasing economies of scale," he said in a note.
The research house maintained its "Buy" call on Mr DIY with a target price of RM1.87, implying a 16 per cent upside and a forecast dividend yield of four per cent for financial year 2026 (FY26).
It noted that Mr DIY's shares trade at a 20–30 per cent discount to peers despite offering comparable earnings visibility and a strong market position.
Soong said inflationary pressures continue to push consumers to downtrade and seek value-for-money products, a trend that bodes well for Mr DIY.
"With over 1,400 stores nationwide, a strong brand and affordable product range, the group is well-positioned to capture resilient domestic spending," he said.
He added that the government's Sumbangan Asas Rahmah programme could be another avenue to attract lower-income shoppers if participation is expanded beyond the current limited number of outlets.
Mr DIY plans to open at least 190 net new stores this year, including new formats with Chinese partner KK Group, which will broaden its product mix into beauty, wellness, lifestyle and fashion, appealing to female and Gen Z consumers.
RHB Research expects sustained gross profit margin tailwinds to offset rising operating costs from wage, rental and utility hikes linked to government reform measures.