KUALA LUMPUR: MBSB Investment Bank Bhd has maintained a “buy” rating on Mr DIY Group (M) Bhd, citing the retailer’s dominant scale, predictable growth, and structural cost and margin advantages that support steady earnings expansion.
The research note highlighted that the group’s multi-format strategy reinforces its market leadership in Malaysia’s fragmented home-improvement and value retail sectors.
“Structural tailwinds, including continued downtrading, rising lifestyle retail penetration, and automation-driven cost efficiencies, underpin the long-term sustainability of the group’s margins and returns,” MBSB said.
MBSB said Mr DIY’s core profit after tax and non-controlling interests is projected to rise to RM621.4 million in financial year 2025 (FY25), RM692.6 million in FY26, and RM751.0 million in FY27, implying annual growth of 9.6%, 11.5%, and 8.4% year-on-year, respectively.
It said Mr DIY’s earnings momentum is expected to be driven by the rollout of 185 new stores in FY25 and 155 in FY26, while gross-margin support from private-label penetration and favourable sourcing dynamics will also sustain profits.
Capital expenditure is forecast to rise modestly in FY25–26, reflecting the final phase of the warehouse expansion and continued rollout of new store formats.
On dividends, the group aims to distribute 50–65% of earnings, though actual payouts have consistently exceeded this range. In the first half of FY25, 82.5% of profit after tax was paid out, with the second-quarter dividend alone representing an 89.6% payout ratio.
“Dividend yields are forecast at 3.5% in FY25, 3.6% in FY26, and 4.1% in FY27, while payout ratios are expected to normalise but remain elevated.
“With operating cash flow consistently outpacing capex, Mr DIY is well positioned to maintain generous dividends without constraining growth investments in automation, store expansion, or new formats,” MBSB added. – Bernama
