Company Coverage
Mr. DIY (MRDIY MK): 2Q26: Earnings Disappoint As SSSG Contracts
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM1.52
RM1.70
11.8%
RM2.30
Analyst
Highlights
- Earnings disappointed as SSSG bucked the recent trend to contract against expectations.
- A price-lock campaign and lumpy costs further weighed on margins as earnings contracted yoy.
- Maintain BUY with a lower target price of RM1.70 (from RM2.30). Mr. DIY offers a yield of 5.6-6.4% for 2026-28.
Analysis
- Below expectations. Mr D.I.Y. Group (Mr. DIY) posted a 2Q26 core net profit of RM134.4m (-30.0% qoq, -15.2% yoy), bringing 1H26 core profit to
RM326.4m (-1.9% yoy). This disappointed expectations at 45% and 46% of our and consensus full-year earnings forecasts respectively. An interim DPS
of 3.2 sen was declared, bringing 1H26 DPS to 4.8 sen (1H25: 2.9 sen). The negative variance arose from softer-than-expected SSSG.
- SSSG turns negative against expectations. 2Q26 revenue eked out a gain of 3.6% yoy. The increase in store count (+9.1%, or 137 net new stores) to
1,646 stores was partially offset by an unexpected sharply lower same-store sales growth (SSSG) of -3.7% (1Q26: 1.6%). Despite a low-base effect in
2Q25 (-7.2%), SSSG softened further due to: a) an earlier Raya run-in that shifted sales to 1Q26, and b) lower ASPs arising from its price-lock
campaign. We had initially expected SSSG to have bottomed out seeing that SSSG had been contracting for three consecutive years (2023-25), and even
turned positive in the past two quarters. It appears that operating conditions for Mr. DIY stores are more challenging than we had initially anticipated.
- Price-lock campaign and lumpy costs further weigh on earnings. 2Q26 gross margin softened sequentially by 1.2ppt to 47.4% (0.3ppt yoy). Despite
its price-lock campaign, 1H26 gross margin of 48.0% is still at the top end of management's 46-48% target gross margin range. A host of additional lumpy
cost attributed to additional labour and depreciation due to adjustments at its automated warehouse, charitable spending and SST on rental expense that amounted to RM12m. These alongside lower gross margins further weighed on core margins by -3.3ppt to 10.7%.
Highlights
- Earnings disappointed as SSSG bucked the recent trend to contract against expectations.
- A price-lock campaign and lumpy costs further weighed on margins as earnings contracted yoy.
- Maintain BUY with a lower target price of RM1.70 (from RM2.30). Mr. DIY offers a yield of 5.6-6.4% for 2026-28.
Analysis
- Below expectations. Mr D.I.Y. Group (Mr. DIY) posted a 2Q26 core net profit of RM134.4m (-30.0% qoq, -15.2% yoy), bringing 1H26 core profit to
RM326.4m (-1.9% yoy). This disappointed expectations at 45% and 46% of our and consensus full-year earnings forecasts respectively. An interim DPS
of 3.2 sen was declared, bringing 1H26 DPS to 4.8 sen (1H25: 2.9 sen). The negative variance arose from softer-than-expected SSSG.
- SSSG turns negative against expectations. 2Q26 revenue eked out a gain of 3.6% yoy. The increase in store count (+9.1%, or 137 net new stores) to
1,646 stores was partially offset by an unexpected sharply lower same-store sales growth (SSSG) of -3.7% (1Q26: 1.6%). Despite a low-base effect in
2Q25 (-7.2%), SSSG softened further due to: a) an earlier Raya run-in that shifted sales to 1Q26, and b) lower ASPs arising from its price-lock
campaign. We had initially expected SSSG to have bottomed out seeing that SSSG had been contracting for three consecutive years (2023-25), and even
turned positive in the past two quarters. It appears that operating conditions for Mr. DIY stores are more challenging than we had initially anticipated.
- Price-lock campaign and lumpy costs further weigh on earnings. 2Q26 gross margin softened sequentially by 1.2ppt to 47.4% (0.3ppt yoy). Despite
its price-lock campaign, 1H26 gross margin of 48.0% is still at the top end of management's 46-48% target gross margin range. A host of additional lumpy
cost attributed to additional labour and depreciation due to adjustments at its automated warehouse, charitable spending and SST on rental expense that amounted to RM12m. These alongside lower gross margins further weighed on core margins by -3.3ppt to 10.7%.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM1.52
RM1.70
11.8%
RM2.30
Analyst
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