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KUALA LUMPUR, Feb 18 — Mr DIY Group (M) Bhd’s resilient business model will continue to churn sustainable earnings growth, driven by outlet expansions and same-store sales growth (SSSG).
RHB Research in a note today said the valuation gap between Mr DIY and other large-cap consumer stocks will narrow in view of the company’s sound fundamentals, superior growth profile and potential inclusion into the FBM KLCI.
“Fundamentally, we believe the consistent earnings delivery and sustainable growth potential — on the back of robust home improvement industry growth and progressive contribution from new brands in the longer run — will be the key rerating catalysts for the stock,” it said.
The research house said valuation-wise, Mr DIY is trading at an unwarranted discount of approximately 16 per cent compared to large-cap consumer stocks despite its superior earnings growth profile.
“We expect the gap to narrow in view of the market’s pursuit of sizeable shariah-compliant consumer stocks and the high possibility of Mr DIY’s inclusion into FBM KLCI in the next review,” it added.
It noted that Mr DIY’s revenue for the financial year ended Dec 31, 2020 (FY 2020) improved 13 per cent to RM2.56 billion from RM2.27 billion in FY 2019, while its net profit rose to RM337.16 million against RM317.56 million previously.
As such, RHB Research has maintained its “buy” call on My DIY’s shares, and revised the target price to RM3.95 from RM3.20 previously. — Bernama
Source: Malay Mail
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