KUALA LUMPUR (March 7): Analysts expect a stronger financial year ending Dec 31, 2025 (FY2025) for Mr DIY Group (M) Bhd (KL:MRDIY), with better consumer sentiment and spending boosting same-store sales growth (SSSG) and potentially a rerating of the stock.

In a note on Friday, CGS International said better consumer sentiment and spending, buoyed by civil servant wage hikes, a rise in minimum wage and higher cash handouts, should drive Mr DIY’s same-store sales growth and revenue growth in FY2025.

It estimated that Mr DIY will deliver core earnings per share (EPS) growth of 10% for FY2025.

The comments came after the firm cut its earnings forecasts and target price for the company, after Mr DIY's FY2024 earnings were dragged down by the issues faced by its automated warehouse and declining same-store sales.

CGS cut its core EPS estimates by 25% for FY2025 and 30.3% for FY2026, while its target price for the stock is now RM2.09 a share.

Forecasts for 49%-owned retail chain KKV’s earnings were also lowered, after the management advised that KKV store roll-outs will be pushed back towards the second half of the year, with a lower target of 40 stores versus 50 previously.

In a separate note, RHB Research said the stock’s depressed valuation, at 1.5 standard deviations below its mean, presents an attractive entry point, especially given the anticipated recovery in consumer discretionary spending, underpinned by higher disposable incomes in FY2025.

The research house reiterated its 'buy' call on Mr DIY, maintaining a target price of RM1.87, which represents a 34% upside potential, alongside a 4% dividend yield for FY2025.  

RHB Research, which attended the launch of the group’s second phase of its local collaborative campaign, is of the view that this initiative will play a crucial role in expanding Mr DIY’s total addressable market.  

The firm added that this will serve as a timely refresh of Mr DIY's product line-up and potential driver of a higher average basket size, as it looks to arrest the lacklustre SSSG trend in the last two years.

To recap, on Thursday, Mr DIY held a launch of the second phase of Mr DIY Plus' local collaboration initiative at IPC Shopping Centre.  

The initiative focuses on introducing new products from local brands across 60 Mr DIY stores to spur discretionary spending.  

Successful brands and products from this phase will be expanded to additional locations, following the positive performance of items from the first phase, which are now available in approximately 250 Mr DIY stores.

At the time of writing on Friday, Mr DIY shares were down two sen or 1.4% at RM1.38, valuing the group at RM13.06 billion.