KUCHING (Nov 21): Mr DIY Group Bhd (Mr DIY) remains consistent in its pursuit of opening 180 new stores for the financial year 2023 (FY23), having opened 123 stores year to date across three core brands.
The company also aims to increase its market presence in East Malaysia, which appears to be underserved with 144 stores currently as at end of the third quarter (3Q) of FY23.
The company guided that East Malaysian stores has 30 per cent higher average sales per store compared to store sales in Peninsular Malaysia.
“With 1,203 stores as at end-3QFY23, the company targets to launch 180 new stores in FY24F and up to 2,000 stores by 2028,” commented analysts with AmInvestment Bank Bhd (AmInvestment Bank).
“The new stores opening will be a mixture of its 3 core brands which will be skewed towards more Mr DIY flagship concept stores.
“We continue to favour Mr DIY as its robust revenue growth will be driven by ambitious store network expansion plans, and better product mix by introducing new SKUs to cater for the needs of the affordable market segment.”
This comes as Mr DIY’s earnings for the first nine months (9M) of FY23 came in within expectations of RM402 million. As a comparison, 9M accounted for 68 to 71 per cents of FY20-FY22 core earnings.
Year on year (y-o-y), AmInvestment Bank saw that Mr DIY’s 9MFY23 revenue grew 10 per cent, mainly attributed to a 16 per cent increase in number of stores to 1,203.
“Together with gross margin rising by 480 basis points to 45.2 per cent following the reduction of freight costs and product price adjustment in FY22, Mr DIY’s net profit improved 19 per cent thanks to better,” it added.
“On a quarterly basis, 3QFY23 revenue declined marginally by three per cent due to the absence of a festive season resulting in lower footfalls, as well as softer consumer sentiment.
“Coupled with higher operating costs such as staff and utilities as well as increased depreciation on new store launches, 3QFY23 earnings decreased 18 per cent quarter on quarter to RM124 million.”
In other business news, Kenanga Investment Bank Bhd (Kenanga Research) saw that Mr DIY is planning to introduce one or two new store formats and brands or franchise opportunities.
“This strategy aims to leverage existing relationships with suppliers, landlords, and systems to enhance its business model moving forward.
“The company intends to grow through modest acquisitions, with a focus on horizontal acquisitions aimed at increasing operational efficiency and earnings visibility. Vertical acquisitions, meanwhile, will target future earnings growth, enhanced operational synergies, or supply chain protection.
“Management has indicated that any vertical acquisitions are likely to come from the hardware business industry.”