Mr DIY set for steady 2H25 as expansion offsets weak sentiment"
The retailer added 70 net new outlets in 1H25 and remains on track to open 180 stores this year. CIMB expects revenue growth to be driven by the expanded store network, its value-for-money product mix, and increased consumer downtrading – particularly into its higher-margin white-label products.
Following in line with the second quarter (Q2) and 1H25 results, CIMB has kept its FY2025-FY2027 earnings forecasts, "Buy" call, and RM2.15 target price.
The valuation is based on 30 times price-to-earnings for calendar year 2026, representing a 20 per cent discount to the company's historical average since its listing.The discount reflects weak consumer sentiment under current inflationary pressures.
The broker continues to favour Mr DIY for its defensive sales mix, leadership position, and solid balance sheet, with RM283 million net cash at the end of 2Q25. Dividend yields are projected at 3.3 per cent to 3.9 per cent based on an 80 per cent payout ratio.
Overall, CIMB Securities has maintained a "Buy" rating on Mr DIY, with an unchanged target price of RM2.15.
Hong Leong Investment Bank Bhd (HLIB) said that to date, Mr DIY has added 70 net new stores, predominantly under its core Mr DIY brand, representing 36 per cent of its full-year target of 190 openings and marginally trailing its internal run rate.
It added that the company remains confident of meeting the target, citing an accelerated rollout in the coming quarters.
Expansion priorities are focused on enlarging the store footprint, optimising revenue per square foot, and driving operational efficiency.
Similarly, HLIB has maintained a "Buy" call on Mr DIY, with an unchanged target price of RM2.30.
"We remain optimistic on the group's strategy of store expansion to defend its market share as the leading home improvement retailer," it said.
Meanwhile, RHB Research said the gross profit margin expansion for Mr DIY is sustainable on favourable foreign exchange and increasing bargaining power capitalising on the trade war situation.
"On the other hand, the group is working on right-sizing the staff count by lifting productivity and believes there is more room for improvement. In addition, utilisation rates of the automated warehouses have picked up progressively. These efficiency enhancement efforts should help to mitigate the rising opex from various reform measures," it added.
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