Consumer Cyclical | Retailing
14 August 2025
Mr DIY Group (MRDIY MK): Earnings And Dividend Visibility On Offer; BUY
| Target Price (Return): | MYR1.87 (+17%) |
| Price (Market Cap): | MYR1.60 (USD3,582m) |
| ESG score: | 3.2 (out of 4) |
| Avg Daily Turnover (MYR/USD) | 15.2m/3.54m |
Analyst
Soong Wei Siang
+603 2302 8130
soong.wei.siang@rhbgroup.com
| YTD | 1m | 3m | 6m | 12m | |
|---|---|---|---|---|---|
| Absolute | (13.5) | (5.3) | (4.2) | 1.3 | (23.8) |
| Relative | (10.1) | (8.6) | (4.5) | 1.7 | (22.4) |
| 52-wk Price low/high (MYR) | 1.30 – 2.25 | ||||
Key Highlights
- Maintain BUY and MYR1.87 TP, 17% upside and c.4% FY26F yield. Mr DIY Group’s 1H25 results met expectations on solid GPM and new store expansion. Trading at a sizeable discount to other comparable retailers under our coverage, we believe this is unwarranted – considering the similar degree of earnings visibility it offers as a major proxy to capture the resilient domestic consumer spending. In addition, the sustainable GPM expansion and efficiency gains will insulate earnings from the impact of rising opex.
- 1H25 results were within expectations, dividend a positive surprise. Net profit of MYR333m (+11% YoY) accounted for 52% of both our and consensus forecasts. 2Q25 DPS of 1.5 sen represents a payout ratio of c. 90%, above our expectation. Post results, we make no changes to our earnings forecasts but revise up our dividend payout assumption to 85% from 75%. Our DCF-derived TP stays at MYR1.87 (inclusive of a 4% ESG premium) which implies 25x FY26F P/E.
- Results review. YoY, 1H25 revenue grew 6% to MYR2.5bn primarily underpinned by 162 net new store additions with SSSG recorded at -3%. On a more positive note, 1H25 GPM remained heightened at 47.8% (+2.1ppts), driven by favourable FX and increasing scale of operations globally. This more than offset the opex inflation (opex/revenue +1.1ppts) mainly stemming from higher minimum wages. Consequently, 1H25 earnings rose 11% to MYR333m, with net margin expanding 0.6ppts to 13.5%. QoQ, 2Q25 revenue and net profit fell 3% and 9% due to the earlier timing of Aidil Fitri in 2025 and in reflection of the full impact of higher minimum wages.
- Outlook. Subdued SSSG trends could persist in light of the soft consumer sentiment and robust store expansion, hence management is committed on marketing strategies to attract footfall. The RM2/Eco sales campaign (Figure 2) has garnered encouraging reception and will be further upscaled whilst the recent enrolment into the MyKasih initiative could be another booster. Meanwhile, the GPM expansion is sustainable on favourable FX and increasing bargaining power capitalising on the trade war situation. On the other hand, the group is working on to right-size the staff count by lifting productivity and believes there is more room for improvement. In addition, utilisation rates of the automated warehouses have picked up progressively. These efficiency enhancements efforts should help to mitigate the rising opex from various reform measures.
- Risks to our recommendation include a major delay in expansion plans and persistent weak consumer sentiment.
Forecasts and Valuation
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 4,359 | 4,651 | 5,074 | 5,561 | 6,056 |
| Recurring net profit (MYRm) | 561 | 569 | 639 | 715 | 771 |
| Recurring net profit growth (%) | 16.9 | 1.5 | 12.3 | 11.9 | 7.8 |
| Recurring P/E (x) | 26.39 | 26.00 | 23.15 | 20.68 | 19.18 |
| P/B (x) | 8.5 | 7.6 | 7.3 | 6.9 | 6.6 |
| P/CF (x) | 15.21 | 15.86 | 13.93 | 13.77 | 13.10 |
| Dividend Yield (%) | 2.0 | 3.2 | 3.7 | 4.1 | 4.4 |
| EV/EBITDA (x) | 13.00 | 12.50 | 11.30 | 10.43 | 9.69 |
| Return on average equity (%) | 35.3 | 30.9 | 32.2 | 34.3 | 35.1 |
| Net debt to equity (%) | net cash | net cash | net cash | net cash | net cash |
Overall ESG Score: 3.2 (out of 4)
E Score: 3.0 (GOOD)
S Score: 3.3 (EXCELLENT)
G Score: 3.3 (EXCELLENT)
Please refer to the ESG analysis on the next page
Emissions And ESG
Trend analysis: Absolute emissions are on increasing trend in tandem with business expansion.
| Dec-22 | Dec-23 | Dec-24 | Dec-25 | |
|---|---|---|---|---|
| Scope 1 | 9,511 | 11,563 | 12,218 | na |
| Scope 2 | 96,588 | 120,266 | 146,707 | na |
| Scope 3 | na | na | 12,522 | na |
| Total emissions | 106,099 | 131,829 | 171,447 | na |
Latest ESG-Related Developments
Advanced its decarbonisation efforts by starting to track Scope 3 emissions. Continued to expand its eco-product range, which contributed over 6% of its FY24 revenue, edging closer to the target of 10% by 2030.
Investments in employee training almost doubled YoY in FY24 whilst the training hours/employee also increased significantly. Invested more than MYR1m through its Mr DIY foundation (FY23: MYR595k), reflecting its commitment to drive long-term social impact.
ESG Unbundled
Overall ESG Score: 3.2 (out of 4) (Last Updated: 5 May 2025)
E Score: 3.0 (GOOD)
Advanced its decarbonisation efforts by starting to track Scope 3 emissions. Continued to expand its eco-product range, which contributed over 6% of its FY24 revenue, edging closer to the target of 10% by 2030. Investments in employee training almost doubled YoY in FY24 whilst the training hours/employee also increased significantly. Invested more than MYR1m through its Mr DIY foundation (FY23: MYR595k), reflecting its commitment to drive long-term social impact.
S Score: 3.3 (EXCELLENT)
Mr DIY is investing in the professional development and well-being of its staffs by providing more training hours and expenditure. It has also expanded its commitment to employee well-being with new initiatives, including health screenings, vaccination programmes, and enhancements to its medical facilities.
G Score: 3.3 (EXCELLENT)
The company provides comprehensive set of information and statistics on its business operations. It is also transparent with the expansion plan. The current composition of the Board includes 66% of independent directors and 50% of women directors.
ESG Rating History
The ESG rating has remained consistent at 3.2 from August 2023 to August 2025.
Financial Exhibits
Key drivers
- Store expansion;
- Robust SSSG;
- Market share gain.
Key risks
- Supply disruption;
- Major epidemic outbreak;
- Intense competition.
Company Profile
Mr DIY Group is the largest home improvement retailer in Malaysia, with an estimated market share of 25.4% in revenue terms in 2018. The group is principally involved in the retail of home improvement products and mass merchandise in Malaysia and Brunei.
Financial Summary
| Financial summary (MYR) | Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F |
|---|---|---|---|---|---|
| Recurring EPS | 0.06 | 0.06 | 0.07 | 0.08 | 0.08 |
| DPS | 0.03 | 0.05 | 0.06 | 0.07 | 0.07 |
| BVPS | 0.19 | 0.21 | 0.22 | 0.23 | 0.24 |
| Return on average equity (%) | 35.3 | 30.9 | 32.2 | 34.3 | 35.1 |
Income Statement (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover | 4,359 | 4,651 | 5,074 | 5,561 | 6,056 |
| Gross profit | 1,977 | 2,133 | 2,451 | 2,658 | 2,895 |
| EBITDA | 1,133 | 1,168 | 1,280 | 1,385 | 1,488 |
| Depreciation and amortisation | (313) | (332) | (359) | (378) | (410) |
| Operating profit | 820 | 835 | 922 | 1,006 | 1,078 |
| Net interest | (70) | (79) | (85) | (87) | (89) |
| Pre-tax profit | 753 | 763 | 857 | 960 | 1,034 |
| Taxation | (192) | (194) | (218) | (244) | (263) |
| Reported net profit | 561 | 569 | 639 | 715 | 771 |
| Recurring net profit | 561 | 569 | 639 | 715 | 771 |
Cash Flow (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Change in working capital | 89 | 15 | (35) | (62) | (95) |
| Cash flow from operations | 973 | 933 | 1,062 | 1,074 | 1,129 |
| Capex | (229) | (144) | (126) | (136) | (140) |
| Cash flow from investing activities | (247) | (166) | (126) | (136) | (140) |
| Dividends paid | (303) | (474) | (543) | (608) | (656) |
| Cash flow from financing activities | (628) | (721) | (857) | (993) | (1,006) |
| Cash at beginning of period | 138 | 232 | 276 | 350 | 342 |
| Net change in cash | 98 | 46 | 79 | (55) | (17) |
| Ending balance cash | 236 | 278 | 355 | 295 | 325 |
Balance Sheet (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total cash and equivalents | 232 | 276 | 350 | 342 | 320 |
| Tangible fixed assets | 827 | 882 | 891 | 902 | 908 |
| Total investments | 34 | 60 | 81 | 121 | 167 |
| Total assets | 3,551 | 3,802 | 3,967 | 4,131 | 4,278 |
| Short-term debt | 191 | 128 | 100 | 100 | 100 |
| Total long-term debt | 11 | 11 | 11 | 11 | 11 |
| Total liabilities | 1,806 | 1,864 | 1,933 | 1,991 | 2,022 |
| Total equity | 1,745 | 1,938 | 2,033 | 2,141 | 2,256 |
| Total liabilities & equity | 3,551 | 3,802 | 3,967 | 4,131 | 4,278 |
Results At a Glance
| FYE Dec | 2Q24 | 1Q25 | 2Q25 | QoQ (%) | YoY (%) | 1H24 | 1H25 | YoY (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 1,196.2 | 1,257.2 | 1,214.2 | (3.4) | 1.5 | 2,339.3 | 2,471.4 | 5.6 | YTD sales growth underpinned by 162 net new store additions. |
| Gross profit | 544.7 | 601.2 | 579.5 | (3.6) | 6.4 | 1,068.0 | 1,180.7 | 10.6 | Elevated on the back of favourable FX and increasing scale. |
| Gross margin (%) | 45.5 | 47.8 | 47.7 | (0.1) | 2.2 | 45.7 | 47.8 | 2.1 | |
| Admin exp | (48.7) | (58.5) | (53.4) | (8.7) | 9.7 | (98.4) | (111.9) | 13.7 | Opex inflation arising from higher minimum wages. |
| Other opex | (281.9) | (304.0) | (309.9) | 1.9 | 9.9 | (554.3) | (613.9) | 10.8 | |
| Other opex/revenue (%) | 23.6 | 24.2 | 25.5 | 1.3 | 2.0 | 23.7 | 24.8 | 1.1 | |
| EBIT | 225.1 | 251.5 | 229.7 | (8.7) | 2.0 | 438.6 | 481.1 | 9.7 | GPM expansion negated the opex inflation. |
| EBIT Margin (%) | 18.8 | 20.0 | 18.9 | (1.1) | 0.1 | 18.7 | 19.5 | 0.7 | |
| Finance costs | (19.7) | (19.2) | (18.4) | (4.2) | (6.8) | (38.6) | (37.6) | (2.5) | |
| Shr of associates profit | 2.5 | 1.9 | 0.8 | (59.1) | (69.9) | 3.0 | 2.6 | (12.5) | |
| Pretax profit | 207.9 | 234.1 | 212.0 | (9.4) | 2.0 | 403.0 | 446.1 | 10.7 | |
| Pretax Margin (%) | 17.4 | 18.6 | 17.5 | (1.2) | 0.1 | 17.2 | 18.1 | 0.8 | |
| Tax | (52.7) | (60.0) | (53.4) | (10.9) | 1.4 | (102.9) | (113.4) | 10.2 | |
| Effective tax rate (%) | (25.3) | (25.6) | (25.2) | 0.4 | 0.1 | (25.5) | (25.4) | 0.1 | |
| Net profit | 155.2 | 174.1 | 158.6 | (8.9) | 2.2 | 300.1 | 332.7 | 10.9 | At 52% of the forecasts. |
| Net Margin (%) | 13.0 | 13.9 | 13.1 | (0.8) | 0.1 | 12.8 | 13.5 | 0.6 | 1H25 DPS amounted to 2.9 sen (1H24: 2.2 sen). |
Other Operational Updates
MR. TOY 2.0
- Redesigned speciality toy and collectible store featuring branded toys and new IPs
- Average monthly sales: ~2x
- Average daily transactions: ~1.6x
- Target: 7 stores to be converted/opened by year-end
- Featured brands: Popmart, FunkoPop, Blokees, Hotwheels
RM2 / Eco Campaign
- Monthly sales contribution doubled from <1% to 3%
- More products to be included into the campaign
- Featured product categories: Household items, snacks, personal care, stationery, and more
Recommendation History
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-08-08 | Buy | 1.87 | 1.60 |
| 2025-05-06 | Buy | 1.87 | 1.74 |
| 2025-02-28 | Buy | 1.87 | 1.38 |
| 2024-11-15 | Buy | 2.35 | 1.82 |
| 2024-10-02 | Buy | 2.59 | 2.05 |
| 2024-08-13 | Buy | 2.40 | 2.10 |
| 2024-05-10 | Buy | 2.20 | 1.80 |
| 2024-02-25 | Buy | 2.20 | 1.53 |
| 2023-11-20 | Buy | 2.29 | 1.61 |
| 2023-08-10 | Buy | 2.29 | 1.55 |
| 2023-05-11 | Buy | 2.48 | 1.59 |
| 2023-02-14 | Buy | 2.48 | 1.75 |
| 2022-11-08 | Buy | 2.62 | 1.98 |
| 2022-08-04 | Buy | 2.90 | 2.32 |
| 2022-05-16 | Buy | 4.50 | 2.37 |
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
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This report is issued and distributed in Malaysia by RHB Investment Bank Berhad (“RHBIB”). The views and opinions in this report are our own as of the date hereof and is subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. RHBIB has no obligation to update its opinion or the information in this report.
Malaysia
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