KUALA LUMPUR: MR D.I.Y. Group (M) Bhd, the country’s largest IPO this year, rose to a high of RM1.80 on its trading debut on the Main Market of Bursa Malaysia on Monday.
At midday, shares of the home improvement retailer was trading at RM1.74, up 14 sen. It was the most active counter with 297.28 million shares done at prices ranging from RM1.50 to RM1.80.
It had opened at its offer price of RM1.60.
The FBM KLCI fell 7.70 points or 0.52% to 1,486.94. Turnover was 3.48 billion shares valued at RM2.52bil. There were 242 gainers, 705 losers and 403 counters unchanged.
Bernama reported MR DIY is allocating RM438mil for its business expansion over the next two years.
Chief executive officer Adrian Ong said the company plans to increase the number of its retail stores under the brand Mr D.I.Y, Mr Toy and Mr Dollar to 900 outlets nationwide by Dec 2021.
To-date, Mr D.I.Y has 670 stores across Malaysia and four in Brunei.
"Our focus is to continue opening more stores in our markets in Malaysia and Brunei. Our home improvement stores under the Mr D.I.Y brand will continue to be the main focus for growth, followed by Mr Dollar and Mr Toy.
"We will finance (the expansion) using the strong cash generative capability of our business, which does not only fund our growth but also provide sufficient cashflow for us to pay dividends to our shareholders, ” he said.
"This year alone, we have opened 81 stores and grown our store network by 13.7 per cent. Although brick and mortar stores remain our primary growth strategy, we have also grown our e-commerce business to offer an omnichannel shopping experience to our customers, ” he said.
Moving forward, Ong said the group will continue to invest in strengthening its business and plans to grow its e-commerce segment which saw a 500 per cent rise in revenue in the first half of this year.
He said the group is cautiously optimistic that its businesses would bring value to the shareholders in the long-term.
"Under the Mr D.I.Y brand, we invested with a target of payback in two years and that is a very good payback.
"That is the benchmark which we had set for our businesses, but it is too early to set the payback period for our new businesses, ” he added.
MR DIY raised RM1.5bil from the market. Its IPO comprised up to 941.49 million shares – an offer for sale of up to 753.09 million existing shares and a public issue of 188.40 million new shares.
The RM1.5bil IPO was oversubscribed by retail investors as well as Malaysian and foreign institutional funds by 3.91 times.
This public listing raised RM301.4mil for the company, of which RM276.1mil will be used to repay bank borrowings which will save the company RM15.2mil per year.
This translates to a market capitalisation of approximately RM10bil based on the enlarged share capital of the company.
UOB Kay Hian Malaysia Research initiated a “buy” call with a target price of RM2.20, citing superior earnings growth outlook.
Its aggressive store expansion and increase in market share (enabled by its operational excellence and economies of scale and new growth avenues) have enabled MR DIY to realise four-year earnings compounded annual growth rate (CAGR) in 2017-21F to 20.6%, more than double its peers’ average of 8.1%.
In the home improvement market amounting to RM7.7bil, MR DIY dominates with a lion’s share of 29.1%. This is almost double its market share in three years from 15.5% in 2016, showcasing its reliable and ambitious track record.
Did you find this article insightful?
80% readers found this article insightful