Mr. D.I.Y. Shares Slump After 3Q Earnings Miss Expectations

Dow Jones11-15

By Ying Xian Wong

Mr. D.I.Y. Group $(M)$ shares are set to record their worst performance in 2024 after their third-quarter results fell short of market expectations, leading analysts to trim target prices.

Shares fell as much as 11% early Friday and were recently 6.7% lower at 1.96 ringgit, equivalent to $0.44, on track for its biggest decline so far this year.

Mr. D.I.Y. Group's third-quarter net profit was 1.9% lower on year at 121.6 million ringgit due to higher operating costs. Quarterly revenue was 6.4% higher on year at 1.14 billion ringgit.

Analysts revised the stock's target prices and earnings forecasts after the earnings miss, while remaining optimistic about the company's long-term outlook.

CIMB Securities cut Mr. D.I.Y.'s target price to 2.38 ringgit from 2.45 ringgit, and reduced its 2024 to 2026 earnings per share forecasts by 2.7%-5.7% to reflect lower sales volumes and higher operating costs.

While the minimum wage hike next year could increase staff costs, management aims to offset these costs through automation and gains from a weaker yuan against the ringgit, CIMB analysts Walter Aw Lik Hsin and Seh Yee Sin said in a note. They added that Mr. D.I.Y.'s focus on affordable, essential goods positions the company to benefit from increased consumer spending power driven by higher minimum wage.

CIMB maintained a buy rating on the stock.

Affin Hwang Investment Bank also lowered Mr. D.I.Y.'s target price to 2.35 ringgit from 2.50 ringgit, slashed 2024 to 2026 earnings forecasts by 6.9%, 8.2% and 5.6%, respectively.

Factors like the civil servant pay increase, minimum wage hike, and a stronger ringgit against the Chinese yuan could continue supporting the company's earnings growth in 2025, Affin Hwang analyst Low Jing Yuan wrote.

Affin Hwang also maintained a buy rating on the stock.

Hong Leong Investment Bank cut its target price to 2.60 ringgit from 2.74 ringgit and trimmed its 2024-2026 earnings estimates by 9%, 5% and 5%, respectively.

Analyst Syifaa' Mahsuri Ismail meanwhile expressed confidence in the company's strategy of expanding its store network to maintain its position as the top home improvement retailer in the country.

Write to Ying Xian Wong at yingxian.wong@wsj.com

(END) Dow Jones Newswires

November 14, 2024 21:46 ET (02:46 GMT)

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Mr. D.I.Y. Shares Slump After 3Q Earnings Miss Expectations

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