Maybank IB Research said that despite ongoing weak consumer sentiment, MR DIY is well positioned to benefit given its low price-point products and wide store network.
PETALING JAYA: MR DIY Group (M) Bhd
is on track to meet its targeted dividend payout of 50% for its current financial year, having declared a dividend per share of 0.8 sen for the second quarter ended June 30, 2023, according to Kenanga Research.
This brings the cumulative dividend per share to 1.4 sen in total, equal to a 47% payout for the first half of its current financial year.
According to the research house, MR DIY’s net profit of RM278mil for the first half of financial year 2023 came within expectations at 47% and 49% of its full-year forecast and the full-year consensus estimates.
On a separate note, Maybank Investment Bank (Maybank IB) Research reported that the retail group’s top line growth may soften sequentially in absence of festive spending, before picking up towards the year-end school holiday period.
MR DIY’s gross profit margin is expected to remain consistent in the second half of 2023, given easing freight and logistics costs.
The research house noted that despite ongoing weak consumer sentiment, MR DIY is well positioned to benefit given its low price-point products and wide store network.
In addition, MR DIY’s second quarter 2023 results came in at 48% and 49% of Maybank IB Research and consensus full-year earnings predictions, respectively.
MR DIY’s top line for the first half of 2023 saw a 10% increase year-on-year to RM2.15bil, benefiting from the reopening of the economy, impact of the price hikes in 2022 and the 17% increase in the number of stores to 1,168.
However, given higher payroll costs due to the minimum wage increase requirement in May 2022, as well as additional staff from its retail expansions, the group’s earnings before interest and tax increased by 10% year-over-year.
On a quarterly basis, MR DIY’s second quarter 2023 revenue improved by 5% to RM1.1bil, underpinned by higher transactions and same-store sales growth of 1%.
Ebit, meanwhile, surged by 14% due to the normalisation of freight changes.
MR DIY has reiterated its guidance for a net addition of 180 stores in 2023. Year-to-date, it has added 88 new stores.
The home improvement retailer is also on track to add 14 new MR DIY Plus stores for 2023, having already opened 12 stores, of which four are new stores and the remaining eight stores are conversions.
Kenanga Research upgraded to an “outperform” call on MR DIY at a maintained target price of RM1.67 per share, given its leading position in the home improvement market in Malaysia, strong gross margin and bargaining positions.
Maybank IB Research maintained a “buy” call on the retail group with an unchanged target price of RM2.40 per share, given its stable demand and product appeal with mass market consumers.
