KUALA LUMPUR: Analysts are maintaining a positive outlook for MR DIY, citing resilient growth prospects, disciplined expansion, and stable margins despite a softer consumer environment.
The three major investment banks—CGS International, Kenanga Investment Bank Bhd, and Maybank Investment Bank Bhd—have collectively assessed the retailer’s long-term strategy and financial strength, underscoring continued confidence in the retailer’s strategy and financial strength.
CGS International believes MR DIY’s growth trajectory remains firmly intact. Although the research house made a slight adjustment to its profit forecasts due to weaker contributions from its associate company KKV, it continues to expect strong earnings momentum over the next three years.
CGS highlights several factors behind this confidence: steady revenue growth driven by ongoing store expansion, signs of improvement in sales at existing outlets, stabilising operating costs and healthier profit margins supported by a stronger ringgit.
The research firm also points to MR DIY’s rising dividend payouts—climbing from 60% two years ago to over 90% in the latest quarter—as a signal of management’s commitment to rewarding shareholders.
“With this, CGS expects the company’s return on equity to recover to levels last seen in 2022,” the research firm said in a recent report.
Kenanga notes that MR DIY is entering a more disciplined and strategic phase of expansion.
Rather than focusing purely on the number of new outlets, the company is fine-tuning its store network to enhance productivity.
The research firm said this includes targeted openings, reconfiguring selected formats, such as MR TOY, integrating the EMTOP brand into larger MR DIY Plus outlets, and closing underperforming stores where necessary.
“While store openings for next year will be more measured, management has reaffirmed its long-term ambition of reaching 2,000 outlets by 2028.
Kenanga emphasises that recent store closures—mainly those involving the MR DOLLAR brand—are expected to have minimal impact on revenue but will help strengthen profitability.
Maybank also maintains a positive stance, emphasising the expected uplift from festive season spending and the benefits of a stronger ringgit in supporting stable profit margins.
The bank-backed research firm notes that MR DIY’s focus on larger-format stores could boost sales per square foot and accelerate same-store sales growth next year.
Although Maybank made minor adjustments to its earnings forecasts due to updated assumptions on store openings, it continues to rate MR DIY as a “Buy” with an unchanged target price of RM1.85.
The research firm also pointed out that while same-store sales remained slightly negative in the recent quarter, the trend is gradually improving compared to earlier in the year.
CGS maintains a positive view on MR DIY, noting that stronger margins—supported by a firmer ringgit and greater procurement scale—have enabled the company to roll out attractive promotions, such as its RM2 product programme.
The research firm said MR DIY also continues to widen its participation in the government’s Sumbangan Asas Rahmah (SARA) aid scheme, with 125 stores currently involved and plans to expand this to 300 by early 2026.
CGS believes these initiatives, combined with expected improvements in consumer disposable income from civil servant pay adjustments, additional RM100 cash handouts in February 2026, and increased tourism tied to Visit Malaysia 2026, will lift spending sentiment and support higher sales and revenue growth next year.
The research house reiterates its “Add” recommendation and target price of RM2.09, saying MR DIY’s valuation remains attractive at about 20 times estimated 2026 earnings—significantly lower than global peer Dollarama.
“CGS sees a recovery in same-store sales as a key catalyst for a potential re-rating, while noting that slower store openings or weaker margins would be the main downside risks,” it said.
Kenanga highlights MR DIY’s continued focus on elevating its store experience for more affluent and urban shoppers through its upgraded MR DIY Plus concept.
The research firm said the refreshed, larger-format MR DIY Plus 2.0 stores—such as those recently opened in MyTown Kuala Lumpur and Imago Sabah—have shown encouraging results.
It said converted outlets are recording an average sales increase of about 6%, while newly opened MR DIY Plus stores are generating roughly 1.4 times the revenue of converted locations.
“Management plans to add another ten MR DIY Plus stores in 2026, including both new openings and conversions, which Kenanga believes will further support the group’s sales momentum,” Kenanga said.
Maybank notes that MR DIY is refining its store expansion strategy following a review of performance across its formats.
The research firm said MR DIY will discontinue opening MR DIY Express outlets, as its larger MR DIY and MR DIY Plus stores continue to attract higher foot traffic and deliver stronger sales due to their wider product range and enhanced store design.
“Reflecting this shift, MR DIY plans to open an additional ten MR DIY Plus stores in 2026.
“The group has also revised its FY25 store opening target to 185 outlets and set a FY26 target of 155, which includes 15–20 KKV stores. Management highlighted that KKV has yet to turn profitable,” Maybank said.
Maybank has made slight adjustments to its earnings forecasts—raising estimates by about 1% annually—after factoring in current operating levels and the lower store rollout assumptions.
The bank notes that MR DIY remains focused on optimising sales across its various store formats, while maintaining stable gross margins of around 47%, supported by the stronger ringgit and resulting cost efficiencies.
Taken together, the three research firms present a unified message that, despite short-term consumer softness and selective adjustments to its store network, MR DIY remains well positioned for sustained growth.
With a disciplined approach to expansion, improving cost structures, stable margins and strong shareholder returns, the company continues to demonstrate resilience and long-term value for investors.
