Broker: UOB Kay Hian

Date of Report: 10 July 2025

Mr D.I.Y. Group: Revamps, Expansion, and Steady Growth Make It a Top Retail Pick for 2025

Overview: Malaysia’s Home Improvement Retail Giant Steps Up Its Game

Mr D.I.Y. Group (MRDIY MK), the largest home improvement retailer in Malaysia, continues to impress with innovative store revamps and strategic expansion. Boasting over 40% of the national home improvement market share, MR D.I.Y. is not just a dominant force at home but is also expanding in Brunei and diversifying into toy and dollar-concept stores. As of July 2025, the group’s market capitalization stands at RM16 billion (US\$3.8 billion), supported by a vast network of 9,468 million shares issued and a robust average daily turnover of US\$4.4 million.

Key Shareholder Structure & Performance Snapshot

• Major Shareholders: Tan Yu Yeh (50%), EPF (8.5%), Hyptis (4.9%)
• Shariah Compliant: Yes
• 52-week Price Range: RM2.26 (high) / RM1.28 (low)
• Current Share Price: RM1.67
• Target Price: RM1.95 (Upside: 16.1%)
• FY25 NAV/Share: RM0.22
• FY25 Net Cash/Share: RM0.01

Despite recent market headwinds, the stock shows resilience and attractive risk-reward potential, trading at a forward PE of 25.5x, below its historical mean.

Store Revamps and Diversification: A Winning Strategy

Mr. Toy Revamp: Enhanced In-Store Experience and Strong Early Results

MR D.I.Y. recently overhauled its Mr. Toy stores, introducing bright, inviting entrances, playful signage, creative lighting, and themed wall designs for a more immersive shopping experience. The vertical merchandising by product category brings greater order and appeal. This transformation isn’t just cosmetic—early indicators show a 2-3x uplift in sales post-revamp, with the average basket size for revamped stores expected to be over 30% higher.

The product mix now reflects a strategic shift: 40% is externally sourced branded merchandise from licensing giants like Mattel and Disney, while 60% remains in-house SKUs. This blend leverages brand equity to drive higher basket sizes and increased consumer footfall.

• Nearly 60 Mr. Toy outlets in total
• 30 stores targeted for similar revamps over the coming years

KKV and X11: New Formats Targeting Teens and Adult Collectors

MR D.I.Y. is also accelerating the rollout of its KKV venture, which includes lifestyle concepts like The Colorist and the soon-to-launch X11—a premium toy and collectible store tailored for teens and adult collectors. Unlike Mr. Toy, X11’s expansion pace will depend on initial market response, with no set rollout targets yet. All KKV-related outlets (including sub-brands) are included in the group’s 30-store per annum expansion target, while MR D.I.Y. and its various formats aim to add 160 stores in 2025.

KKV and its sub-brands are estimated to contribute 2-3% of 2025 earnings, signaling a promising new revenue stream.

Financial Performance and Forecast: Solid Growth Ahead

The forecasted three-year profit CAGR stands at 7.5%, an attractive growth rate for a large-cap retailer. The group also maintains a strong balance sheet, low net debt, and healthy interest coverage ratios.

2025 Outlook: Margin Trends, Forex Impact, and Risks

• 2Q25 SSSG: Same-store sales growth could be lower year-on-year due to festive-related spending shifting to 1Q25 (Hari Raya timing), and the full impact of the minimum wage hike. Sequentially, operating margins are expected to be lower but will be supported by favorable forex rates.
• Ringgit Strength: The ringgit’s continued strength versus the renminbi (up 7.2% from 2024 average) is a boon, as 70% of cost of goods sold is imported from China. MR D.I.Y. does not hedge its purchases, but with inventory lead times averaging five months, gross margins should remain favorable in the coming quarters.
• Risks: Key downside risks include a sudden weakening of the ringgit against the renminbi or new trade restrictions by China.

Valuation and Recommendation: Attractive Risk-Reward Profile

The recommendation is to Maintain BUY with an unchanged target price of RM1.95. MR D.I.Y. currently trades at about 30x forward PE—at the lower end of its historical band—offering compelling value given its growth outlook, scale, and resilient business model. Industry sentiment remains subdued, which has led to a temporary discount in valuation, further enhancing the upside potential for investors.

ESG Initiatives: Strengthening Sustainability and Governance

• Environmental: Targeting a 30% increase in renewable energy usage by 2030 (from 2021 base year) for warehouses; aiming to reduce Scope 1 and 2 emissions by 20% and 30% respectively by 2030.
• Social: Workforce comprises 57% male and 43% female employees. The company also employs 26 less-abled and four Orang Asli individuals, underscoring its commitment to diversity and inclusion.
• Governance: Board gender diversity stands at a 4:2 male to female ratio, with three out of six board members being independent, ensuring robust oversight and balance.

Key Operational Assumptions for 2025-2027

Conclusion: A Large-Cap Retailer with Resilient Growth and Attractive Valuation

MR D.I.Y. is solidifying its leadership in Malaysia’s retail sector through store innovation, brand partnerships, and targeted expansion in lifestyle and toy segments. With steady earnings growth, robust margins, proactive ESG initiatives, and a compelling valuation, the group continues to stand out as a top pick for investors seeking exposure to Southeast Asia’s evolving consumer landscape.