Shares of Mr. D.I.Y. Group, the home-improvement retailer, experienced a significant surge early Thursday following impressive second-quarter earnings. The company's stock jumped 6.3% to 1.52 ringgit, bringing the 12-month losses down to 30%.
Mr. D.I.Y. reported that its quarterly net profit reached MYR150.3 million ($32.9 million), marking an 11% increase, as revenue rose due to the contribution from new stores and improved gross profit margins. The latter was primarily driven by lower freight costs and higher selling prices. Quarterly revenue also showed growth, increasing by 4.9% to MYR1.1 billion compared to the previous year.
Analysts at Citi highlighted that Mr. D.I.Y.'s dividend of MYR0.008 for the quarter represents a record 50% payout ratio for the company. The management of Mr. D.I.Y. has suggested that their "major capex cycle" is nearing completion, which will allow the company to increase dividend payments according to Citi analyst Wai Hoong Liew.
Citi has maintained its buy rating and MYR2.07 target price on the stock, anticipating a positive reaction to the strong results and high dividend payout. Likewise, Kenanga Investment Bank upgraded Mr. D.I.Y. to outperform from market perform, maintaining the target price at MYR1.67, based on the emerging value following recent weaknesses in the share price.
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