PETALING JAYA: MR DIY Group Bhd’s earnings momentum is expected to pick up in the final quarter of this year, in view of the favourable year-end seasonal shopping period.
Looking further ahead, RHB Research noted that higher wages in both the public and private sectors in 2025 is expected to lift disposable income and consumer sentiment.
“Together with the upsized cash handouts for the lower-income groups, MR DIY could stand to benefit as the recipients of these measures fall well within its targeted customer groups.
“On top of that, the stronger ringgit and Chinese New Year festive season (in January) is another catalyst, potentially bringing about a margin upside potential,” the research house said in a report.
For the third quarter ended Sept 30, 2024 (3Q24), MR DIY’s net profit was down 1.9% year-on-year (y-o-y) to RM121.6mil, while group revenue rose to RM1.1bil.
This was primarily due to contributions from new stores as the transaction volumes rose 9% to 45.3 million.
The group’s store network grew 15% y-o-y to 1,389 stores over the first nine months of 2024.
Cumulatively up to September 2024, net earnings rose 4.9% y-o-y to RM421.7mil, driven by an increase in turnover of 8.1% to RM3.47bil.
Hong Leong Investment Bank Research noted that MR DIY has announced its target of 190 new store openings for financial year 2025 (FY25), ahead of its usual 180 target.
This will also include its new strategic investment in the KKV retail brand chain.
“The group is on track to meet its target of 10 KKV stores for the remainder of FY24 and more than 20 new stores for FY25, on the back of its good performance.”
Separately, CIMB Research said the minimum wage hike will have a minimal impact on MR DIY’s profitability.
“MR DIY estimates that up to 56% of its total staff count (18,000 staff as of September 2024) will be affected by the hike in minimum wage from RM1,500 to RM1,700 effective February 2025," the research house said.
The brokerage said MR DIY may consider undertaking certain price adjustments to ensure that it can maintain its margins.
