KUALA LUMPUR: AmInvestment Bank Research raised its earnings forecast and fair value on MR DIY Group (M) Bhd to RM4.45 following a strong earnings performance coupled with optimism over its new store expansion and format, MR DIY Express.

       "We revise upwards our 2022F–23F earnings estimates by 2% each to reflect stronger-than-expected sales following the reopening of the economy.

       "Our revised FV also reflects the company’s near-to-medium term plan of continuing to focus on expanding MR DIY’s network given its ability to deliver superior returns," it said in a report, while reiterating its "buy" call.

       MR DIY group plans to open 180 new stores in 2022, out of which 20 to 30 will be MR Dollar and MR TOY, while the remainder is expected to be MR DIY.

       Of the MR DIY openings, 10% will be in the MR DIY Express store format.

       Meanwhile, AmInvestment said the group, which leverages its data analytics capability to constantly optimise its product offerings, may look into negotiating with suppliers to increase the volume of inventory purchases while bringing down the price per product.

       MR DIY could also pass down the additional cost to end consumer by increasing its product prices, said the research firm, although the group may still be able to price its product more cheaply than its competitors given its extensive store network and direct access to suppliers, which could cushion the impact on its transaction volume.

       In its recently announced results, 4Q21 net profit of RM134.6mil were above AmInvestment's expectation but in line with that of consensus at 105% and 99% of estimates respectively.

       The stronger earnings were mainly attributed to an increase in the number of transactions, higher sales from the same stores, and basket size, due to the reopening of the economy starting mid-August last year.

       Revenue rose 32% year-on-year to RM3.37bil on the back of 11.2% same-store sales growth and the net addition of 166 new stores.