MR DIY Group’s financial year 2025 (FY25) results met expectations, thanks to sustained gross profit margin (GPM) tailwinds and robust store expansion.
“We believe the year-to-date (YTD) share price rally still has legs, in view of Mr DIY’s position to benefit from a pick-up in discretionary spending and the current positive sector sentiment,” said RHB.
Return on equity (ROE) expansion as a result of high dividend payouts should also justify a narrower valuation gap vs that of other large-cap peers.
“Full-year core net profit of MYR636 mil (+12% YoY) accounted for 100% of both our and consensus forecasts,” said RHB.
FY25 revenue grew by 7% to MYR5 bil, primarily underpinned by 121 net new stores. Meanwhile, FY25 GPM expanded by 0.6ppt to 47.3% on favourable FX and growing scale, which translated to a 10% increase in FY25 gross profit.
With operating expenses rising in tandem with the gross profit as a result of higher minimum wage, FY25 core net profit grew by 12% to MYR636 mil.
Quarter four of 2025 sales were 7% higher, thanks to positive year-end seasonality, but net profit surged 18%, a function of operating leverage, tight opex control, and a swing in the effective tax rate.
Consumer sentiment could improve in 2026, considering the healthy wage growth, stable macroeconomic conditions, and continuous fiscal support.
This should propel higher discretionary spending, which MRDIY is well-positioned to capitalise on, given its wide product assortments and entrenched store network across the country.
GPM upside from a strong MYR may be capped, though, as management aims to be more aggressive with price promotions to entice footfall.
Meanwhile, its new store opening target remains at 155 outlets (130 Mr DIY stores and 25 KKV outlets). It is also planning to refurbish more than 100 existing stores to boost sales productivity.
The generous dividend payout could continue in FY26, as management looks to maintain an efficient capital structure and drive ROE upwards.
“Downside risks to our recommendation include a major delay in expansion plans and persistently weak consumer sentiment,” said RHB. —Feb 25, 2025
Main image: Mr DIY
