RHB Research has maintained a “Buy” Mr DIY Group Bhd with a TP of MYR4.59 with a 21 upside. It said that it would continue to like Mr DIY as a proxy to resilient domestic consumption – its 3-year earnings CAGR of 22% will be anchored by the effective business model and entrenched brand equity.
It said that this should propel further valuation rerating, considering the scarcity of large-cap consumer stocks offering robust earnings growth
RHB said that looking forward, it believes the encouraging earnings growth momentum can be sustained, notwithstanding the pandemic challenge, considering the high vaccination rate and the Government’s pledge against another nationwide lockdown
The research house said that Mr DIY is targeting to open c.180 stores in FY22F, of which c.150 will be Mr DIY stores. “Apart from the network expansion, cost and operational efficiencies, as well as supply chain management, will be the other areas of focus for management to drive growth going forward,” it said.
RHB said that the ongoing price lock campaign only ending in March, we believe Mr DIY will maintain its selling prices, notwithstanding the higher input costs. “This should render Mr DIY market share gains, and thereafter the company will evaluate the situation before deciding on its pricing strategy. As such, the GPM pressure is likely to persist into 1Q22F,” it said.
