Quick take: Mr DIY falls after earnings miss expectations

KUALA LUMPUR: Shares in Mr DIY Group M Bhd fell marginally in early trade Friday after the company's second quarter earnings fell short of expectations.

The home improvement retailer fell 1.18%, or four sen to RM3.34 at 9.27am. Mr DIY- C1 fell one sen to 12.5 sen and Mr DIY-CA declined 0.5 sen to 61 sen.

Mr DIY’s net profit rose 44.1% to RM82.13mil for its second quarter ended June 30, 2021 (2Q21) from RM56.98mil a year ago. Revenue for the quarter stood at RM759.82mil against RM516.66mil reported last year.

It declared an interim single tier dividend of RM37.66mil or 0.6 sen per share, to be paid on Sept 23.

In the first six months to June 30, Mr DIY’s net profit jumped 79.2% to RM206.924mil from RM115.44mil a year ago. Revenue for the period stood at RM1.63bil from RM1.05bil last year.

Maybank Investment Bank Research said Mr DIY’s 2Q21 results fell below the house/consensus expectations mainly due to adverse FMCO impact and higher input costs.

“2Q21 core net profit of RM82mil brought 1H21 core net profit to RM207mil, below expectations at 41%/40% of our/consensus full-year earnings estimates,” it said.

The research house said its FY21 earnings estimate was lowered by 13% but FY22-FY23E were maintained.

“We turn positive on Mr DIY given its mass market appeal and expected earnings recovery once full vaccination rates are achieved nationwide and lockdown measures ease.

“With 19% total shareholder return, we upgraded Mr DIY to buy with an unchanged target price of RM4 (on 40x FY22E PER - based on its superior

earnings growth prospects versus its regional peers),” it said.

RHB Research said Mr DIY’s 1H21 results missed expectations. It said the core net profit of RM207mil met 39-40% of the house and street estimates.

The research house the negative deviation could be attributed to the business disruption arising from the imposition of a tighter lockdown.

“Post-results, we cut FY21F-23F earnings by 14%, 3% and 3%.

“Correspondingly, our target price is revised to RM4.41, which implies 45x FY22F P/E, in line with the valuation we ascribed to other large-cap consumer peers,” RHB said.

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