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KUALA LUMPUR: MR DIY Group (M) Bhd, the country’s largest IPO this year, rose to a high of RM1.80 on its commercial debut in the main Bursa Malaysia market on Monday.
As of noon, the home improvement retailer’s shares were trading at RM1.74, 14 sen higher. It was the most active counter with 297.28 million shares carried out at prices ranging between RM1.50 and RM1.80.
It had been opened at its offer price of RM1.60.
The FBM KLCI fell 7.70 points or 0.52% to 1,486.94. The turnover was 3.48 billion shares valued at RM2.52bil. There were 242 winners, 705 losers, and 403 unchanged counters.
Bernama reported that MR DIY is allocating RM438mil for its business expansion over the next two years.
CEO Adrian Ong said the company plans to increase the number of its retail stores under the Mr DIY, Mr Toy and Mr Dollar brands to 900 outlets across the country by December 2021.
To date, Mr DIY has 670 stores in Malaysia and four in Brunei.
“Our goal is to continue to open more stores in our Malaysian and Brunei markets. Our home improvement stores under the Mr DIY brand will continue to be the main focus of growth, followed by Mr Dollar and Mr Toy.
“We will finance (the expansion) using the strong cash-generating capacity of our business, which not only finances our growth, but also provides sufficient cash flow for us to pay dividends to our shareholders,” he said.
“This year alone, we have opened 81 stores and increased our store network by 13.7%. While brick-and-mortar stores remain our main growth strategy, we have also grown our e-commerce business to deliver an omnichannel shopping experience. to our clients. “he said.
Going forward, Ong said the group will continue to invest in strengthening its business and plans to grow its e-commerce segment, which saw a 500 percent increase in revenue in the first half of this year.
He said the group is cautiously optimistic that its businesses will bring long-term shareholder value.
“With the Mr DIY brand, we invested with a two-year payback target and that’s a very good payback.
“That is the benchmark that we had set for our businesses, but it is too early to set the payback period for our new businesses,” he added.
MR DIY raised RM1.5bil from the market. Its IPO comprised up to 941.49 million shares, an offer to sell of up to 753.09 million existing shares and a public issue of 188.40 million new shares.
The initial public offering of RM1.5bil was oversubscribed by retail investors, as well as Malaysian and foreign institutional funds 3.91 times.
This public listing raised RM301.4 thousand for the company, of which RM276.1 thousand will be used to pay off bank loans that will save the company RM15.2 thousand per year.
This translates to a market capitalization of approximately RM10bil based on the expanded share capital of the company.
UOB Kay Hian Malaysia Research initiated a “buy” call with a price target of RM2.20, citing an outlook for superior earnings growth.
Its aggressive store expansion and increased market share (thanks to its operational excellence and economies of scale and new avenues of growth) have enabled MR DIY to make four-year profits with a compound annual growth rate (CAGR) in 2017-21F at 20.6%, more than double its peer average of 8.1%.
In the home improvement market amounting to RM7.7bil, MR DIY dominates with a lion share of 29.1%. This is almost double its market share in three years from 15.5% in 2016, demonstrating its reliable and ambitious track record.
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