Mr DIY Reports A Robust Set of Earnings: 6 Things Investors Should Know

It was not too long ago I did a deep dive into Mr D.I.Y. Group (M) Berhad (KLSE: MRDIY) (“Mr DIY”). The group had made a stellar debut on the Main Market of Bursa Malaysia, and was the largest listing on the Malaysian exchange in 2020, raising nearly RM1.5 billion from both institutional and retail investors. 

Fast forward to today, Mr DIY has recently announced its best quarterly results to date, with revenue rising 62.9% to RM870.2 million and profit after tax (“PAT”) surging 113.5% to RM124.8 million for the quarter ended 31 March 2021 (“1Q 2021”), compared to the corresponding period in 2020 (“1Q2020”).

Here are six other interesting facts about the group’s latest earnings that investors should know about.

1. Resilient revenue performance despite challenging environment

The higher 1Q2021 results came on the back of higher average monthly sales per store attributable to the strong performance of its standalone stores, and lower sales during the comparative period last year due to the lockdown imposed between 18 to 31 March 2020. 1Q2021 average monthly revenue was 39.4% higher versus January/ February and 13.3% higher versus 4Q2020. The group believes this is due to its competitive edge of providing everyday low prices for non-discretionary household products. 

(Source: 1Q2021 results presentation)

2. Growth in-store network

During the quarter, the Group’s store network grew by net 54 stores across its three brands, comprising 30 new Mr D.I.Y. stores, 22 Mr Dollar Stores and 2 new Mr Toy stores. As of 31 March 2021, the total number of stores stood at 788, comprising 713 Mr D.I.Y. stores, 39 Mr Toy stores and 36 Mr Dollar stores. The group aims to open a further 121 stores for its 3 brands in 2021. Future store expansions are expected to be funded via internally generated cash flows. 

(Source: 1Q2021 results presentation)

3. Overview of key cost items

Administrative and operating expenses rose 60.8% and 32.5% year-on-year respectively to RM31.5 million and RM153.6 million for 1Q2021, mainly attributed to marketing and staff costs as a result of business expansion, as well as higher depreciation of right-of-use assets incurred in line with the higher number of stores. 

However, when viewed as a percentage of revenue, margins for key cost items remain fairly stable. In fact, operating expenses for 1Q2021 is marginally lower compared to 1Q2020, as overhead expenses were incurred despite the temporary closure during the Movement Control Order (MCO) 1.0 in 1Q2020. 

(Source: 1Q2021 results presentation)

4. Healthy cash flow and strong balance sheet

The group’s cash flow and balance sheet remain healthy. Net cash flow from operations grew to RM221.4 million for 1Q2021, whilst the group’s net gearing ratio stood at 0.04 times; the latter has reduced significantly compared to 4Q2020 following further repayment of borrowings during the quarter. 

5. Dividend of RM50.2 million declared

In line with the group’s policy of paying quarterly dividends, Mr DIY has declared a dividend of RM50.2 million for 1Q2021. The first interim single-tier dividend of RM0.008 per ordinary share is to be paid on 17 June 2021 to shareholders whose name appear in the Record of Depositors on 21 May 2021. 

6. Growing e-commerce with the launch of robotic warehouse

In March 2021, the group launched a 65,000 square-foot robotic warehouse in Seri Kembangan, Selangor. The robotic warehouse is equipped with 23 programmable robots that can fulfil online purchases 2x faster compared to manual systems. Mr DIY expects the improved efficiencies, user-friendliness, and reliability of its e-commerce platform to further strengthen the brand’s resonance with the Malaysian public, making it the preferred one-stop shop for all their home improvement needs. 

(Source: 1Q2021 results presentation)

In summary: growth plans remain intact

The group growth plans continue to remain intact. This growth is driven by two main factors: positive same-store sales growth and contribution from new stores. The group remains positive of its prospects going forward, premises on its affordable prices that make Mr DIY products accessible to all, its breath of about 18,000 products stock-keeping units (SKUs), the convenience of its 700+ outlets nationwide, and its timeless promise of unbeaten value which resonates with the masses. 

And with the home improvement industry expected to grow at a compounded annual growth rate (CAGR) of 10.7% over 5 years from 2020 – 205 (source: Frost & Sullivan), there is significant scope for Mr DIY to further penetrate the home improvement retail market. 

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