¥KUALA LUMPUR: MR D.I.Y Group (M) Bhd is on track to open up to 180 new stores this year, according to Hong Leong Investment Bank (HLIB) Research.
"The progress of 180 target store openings for the fiscal year 2023 (FY 2023) is slightly behind, but management is confident that this will pick up in the fourth quarter of 2023 (4Q 2023)," the firm said in a note today.
As of 3Q 2023, MR D.I.Y has opened 123 new stores, with the majority being MR D.I.Y outlets and only two being MR TOY outlets. This represents 68 per cent of its full-year target of 180 stores.
The company expects the store openings to catch up in 4Q 2023 to fulfil the target of having 180 new stores for the whole of this year.
HLIB Research noted that the company is focused on expanding its store network, optimising revenue per square foot, and improving operational efficiency to drive financial performance. MR D.I.Y has set a long-term target of 2000 stores across its core brand in the next five years, translating to a target of 19,000 people per Mr DIY store.
The company's 2024 target includes store expansion in Sabah and Sarawak, with a 58 per cent higher population density per store and a higher average sales per store of around 30 per cent.
In the first nine months of 2023 (9M 2023), MR D.I.Y achieved a core pre-tax profit of RM400.3 million, a 17 per cent year-on-year (YoY) increase, in line with HLIB Research's and consensus expectations at 70 per cent of full-year forecasts.
HLIB Research noted that overall, MR D.I.Y's YoY growth was healthy, with the top line benefiting from store additions while the bottom line expanded with margin improvement and the easing of freight costs.
MR D.I.Y also revised its dividend policy to less than 50 per cent (from 40 per cent previously) in line with better profitability. The management has set a target of 50 per cent to 65 per cent of the quarterly dividend going forward.
HLIB Research has maintained its "buy" call on MR D.I.Y with an unchanged target price of RM2.12.
The firm remains optimistic about the company's strategy of store expansion to defend its market share as the leading home improvement retailer.