MR DIY expected to see growth from expansion

The Star

20 hours ago

Maybank IB expects MR DIY to ramp up store openings in the second half of financial year 2025.
PETALING JAYA: MR DIY Group (M) Bhd 's outlook remains positive with expectations for earnings tailwinds from the appreciation in the ringgit versus the yuan.
There is also the potential for further margin accretion from lower product cost if the United States-China trade tensions escalate and consumer down-trading benefits, said Maybank Investment Bank Research (Maybank IB).
It expects MR DIY to ramp up store openings in the second half of financial year 2025 (2H25) to meet its financial year 2025 new store opening target of over 190 stores, particularly in Sabah, Sarawak, and KKV stores.
Additionally, MR DIY only has about 20 stores equipped with Sumbangan Asas Rahmah/MyKasih terminals as of the end of August 2025.
It is still evaluating whether this adds to overall sales volume and store footfall before aggressively adding cash aid touchpoints to its store network, Maybank IB said.
It reiterated a 'buy' call on the stock with a target price of RM1.85 a share.
CIMB Research, AmInvestment Research, and UOB Kay Hian (UOBKH) Research have also retained 'buy' calls with target prices of RM2.15, RM1.90 and RM2.05 a share respectively.
CGS International (CGSI) Research, meanwhile, has retained its 'add' call while Kenanga Research maintained an 'outperform' call on the stock with target prices of RM2.09 and RM2.04 a share respectively.
CGSI Research said it remained positive on MR DIY's growth trajectory.
It said the stock currently trades at a 2026 price to earnings ratio of 20.1 times, which it believes is undemanding versus global peer Dollarama's 36 times, offering an attractive entry point.
Recovery of its same-store sales growth leading to stronger earnings growth is a key re-rating catalyst, added the research house.
The downside risks cited are fewer store rollouts causing lower revenue growth and weaker margins.
Kenanga Research said the risks to its call include unfavourable foreign exchange trends, volatile supply and logistics, and elevated inflation putting a dent in consumer spending power.
According to UOBKH Research, MR DIY offers a three-year profit compounded annual growth rate of 7.5%, which is relatively attractive for a large-cap retailer.
Furthermore, against a backdrop of its valuations trading below its historical mean, it believes that MR DIY's reward-to-risk payoff is still appealing.
While MR DIY offers decent growth, overall industry sentiment appears subdued, which has led to a discount relative to its historical valuations, it added.
CIMB Research also expects demand for MR DIY's products to stay resilient, driven by a value-focused product mix, especially white label products, consumer downtrading given the group's strong quality-to-price proposition, and marketing initiatives emphasising affordability.