We joined briefing with MR D.I.Y.’s management on Friday following the company’s 1Q21 release, and received key progress and updates.

• Overview. MR.D.I.Y. posted a spectacular revenue of RM870m (+13% qoq, 63% yoy) on the back of i) positive contribution from new stores ii) better average monthly sales per store (especially for standalone stores) that saw increase in total transaction segments (22% yoy) from 24.6m to 29.9m. The basket size for MR D.I.Y is now RM28-29 vs RM20- 25 previously. This signals that there is a readjustment of higher consumer spending aided by i-Sinar despite MCO 2.0 in place starting on 13 Jan 2021.

• Key highlights. During the quarter, MR.D.I.Y. ended with 788 new stores, adding another 54 stores to the existing store network. Currently, MR.D.I.Y. has 5 stores in Brunei and 783 stores in Malaysia. For FY21, the opening of new stores is forecast to grow by up to 100/25/50 for MR.D.I.Y./MR.Toy/MR.Dollar. This expansion plan is to be funded via internal generated cashflows.

• Earnings against consensus estimates: Inline.

• Dividend. A total DPS of 0.8 sen was declared, which will go “ex” on 20 May 2021.

• Outlook. Due to significant growth in its business, MR.D.I.Y has taken a proactive step by launching a 65,000-sqft robotic warehouse. According to the management, the company’s operating efficiency is expected to increase by 200% once completed, as well as would solidify its e commerce sales. We expect MR.D.I.Y’s. business outlook to remain exciting following its ongoing effort to improve its sales channels either in physical or online platform aided. The stock has a 47x forward PE based on consensus earnings. We think the high PE is justified given its strong sales track record CAGR FY17-20 of 17.1% and robust growth ahead, high ROE of 40%, and large cap status in the consumer sector.

Source: BIMB Securities Research - 3 May 2021