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KUALA LUMPUR (Oct 26): Mr DIY Group (M) Bhd, the largest initial public offering (IPO) in three years, made a strong debut in the main Bursa Malaysia market.
The home improvement retailer topped the stock exchange’s list of the most traded accountants. The trading volume on its first trading day was 410.15 million shares, which is equivalent to 43.5% of its free float of approximately 941.49 million shares.
Mr DIY closed at RM1.75, up 15 sen or 9.4% from its IPO price of RM1.60. However, the profit is relatively low compared to its low-line peers that made their Bursa debut in the last 12 months. (See table)
The action started on a soft note. It slid to an intraday low of RM1.50 shortly after the opening bell. Nonetheless, DIY gained its bullish momentum and climbed to an intraday high of RM1.80, up 12.5% from its IPO price. With the profit, its market capitalization increased to RM10.98 billion.
At a press conference following its virtual listing ceremony, CEO Adrian Ong said the group has welcomed some 9,000 new shareholders.
“As a company [we] we are focused on what is important: managing our business and the growth we have set out to do.
“Our business started this year with 593 stores. We have said that we will launch 307 new stores from 2020 to 2021, and that will bring us to 900 stores. We are very on target as we speak. The market is still doing well for us,” Ong said.
With the listing of its business, which encompasses operations in Malaysia and Brunei, the group would add more stores in these markets, it said.
The primary focus is the growth of Mr DIY stores, with the secondary growth engine being the Mr DOLLAR and Mr TOY store brands.
He noted that Malaysia has demonstrated high growth potential with a compound annual growth rate of 10.2% and that the group is adding market share to that growth.
“To be honest, we feel very comfortable in that position and we feel that even startups would be very envious of that level of growth. We intend to focus on this and grow that market,” he said.
DIY President Datuk Azlam Shah Alias said Malaysia’s market is growing, with high levels of urbanization and rising income levels.
“There is a culture of modernization by embracing the DIY culture among Malaysians,” Azlam said.
In terms of capital expenditures, Ong said the 307 new stores would be financed using the group’s “strong cash-generating capacity.”
He stressed that this ability would also provide enough cash flow to pay “sufficient dividends” to shareholders. The group’s dividend policy is 40% of its net earnings.
It has allocated RM438 million for the opening of 307 new stores under the three brands.
Under today’s listing exercise, the retailer raised RM1.5 billion, including RM1.2 billion raised from the share sale offering by its major existing shareholders. DIY will allocate around RM301.4 million to reduce its bank loans taken to pay dividends before the listing exercise.
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