KUALA LUMPUR (Aug 12): Mr DIY Group (M) Bhd (KL:MRDIY) tested a four-month low in Wednesday trading before rebounding after its second quarter results missed expectations.
Nonetheless, analysts were broadly positive on Mr DIY’s earnings outlook for the second half of the financial year, expecting improved store productivity and easing cost pressures to support a recovery in profitability.
Mr DIY opened at RM1.51 before losing as much as six sen or 4% to RM1.46, its lowest since April 7. The stock then recovered to close at RM1.52, unchanged from Tuesday, after more than 41 million shares exchanged hands.
The stock has lost more than 17% from its peak in January, giving the company a market capitalisation of RM14 billion.
In a research note, CIMB Investment Bank Bhd (CIMB IB) said a selective price increase following the expiry of Mr DIY’s price-lock campaign, continued demand for low-priced goods, and better productivity from stores lend to an improved earnings outlook for the second half ending Dec 31, 2026 (2HFY2026).
“Following the expiry of its price-lock campaign on July 30, 2026, we expect gradual price adjustments from 3Q2026 to help mitigate higher supplier and input costs,” said CIMB IB.
Mr DIY’s second-quarter net profit fell 15.2% year-on-year to RM134.41 million from RM158.58 million, despite revenue rising 3.6% to RM1.26 billion.
BIMB Securities was the most bullish among the research houses, and made no changes to its earnings estimates after Mr DIY’s first-half results. It maintained its "buy" recommendation and raised its target price to RM2.25 from RM2.20, based on a 33 times price-to-earnings multiple on its FY2027 earnings forecast.
The research house expects the group’s long-term growth prospects to remain intact, citing new stores opened under its more selective expansion strategy have generated about 20% higher sales per sq ft, while converted stores recorded productivity gains of more than 25%.
BIMB Securities also expects the MR DIY Club loyalty programme to support customer retention and spending over time.
“While near-term earnings may remain affected by SST-related expenses, warehouse depreciation and softer consumer spending, we believe these headwinds are manageable given the group's strong balance sheet, net cash position and proven execution track record,” said BIMB Securities.
The consensus rating on Bloomberg leans towards a positive outlook from 17 analysts covering the stock. There are 13 "buy" calls and four "hold" recommendations on Mr DIY’s counter. The 12-month average target price (TP) is RM1.97.
In another note, RHB Investment Bank Bhd (RHB IB) said first-half earnings were below its expectations. It noted that operating expenses grew 11% in the first half, outpacing revenue growth, with higher depreciation, rental-related SST, additional warehouse-related wages and corporate social responsibility expenses contributing to the increase.
The group’s dividend payout was another positive, says RHB IB. Mr DIY declared 4.9 sen in dividends for the first half, compared with 2.9 sen a year earlier, implying a payout ratio of 142.3%.
AskEdge data shows Mr DIY trading at a price-to-earnings (P/E) ratio of 22.1 times, lower than most peers and at its lowest level compared to recent years. The low P/E ratio is partly caused by an increase in earnings in the trailing 12 months.
Its price-to-net asset value ratio of 7.8 multiples is higher than most peers but below the recent years’ average.