The home improvement retailer has faced business disruption from the recent lockdown, leading to a 1H21 core net profit of RM207mil that met only 40% of the consensus full-year estimate.
In a note, RHB Research said the result met only 39% of its full-year forecast but maintained a bullish stance on MR DIY as its underlying fundamentals remain unchanged from the temporary earnings weakness.
"Investors should instead focus on the exciting 27% 3-year net profit CAGR on offer, a scarcity within the sector – premised on a proven business model, established brand equity, and continuous expansion plans," it said.
It added that the group will continue to record robust earnings growth beyond the near term due to its outlet expansion.
MR DIY with its entrenched network of stores in Malaysia will be a major proxy to capitalise on the recovery in consumer spending following the economy reopening post mass vaccination.
"Post-results, we cut FY21F-23F earnings by 14%, 3% and 3%. Correspondingly, our TP is revised to MYR4.41, which implies 45x FY22F P/E, in line with the valuation we ascribed to other large cap consumer peer," said RHB, while maintaining its "buy" call.