KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
MR DIY Group (M) Bhd (KL) has seen its shares surge by approximately RM7 billion in market capitalisation year-to-date, with analysts maintaining a bullish outlook on the stock. On Wednesday, MR DIY's shares rose as much as nine sen or 4.23%, reaching an intraday high of RM2.22 before closing at RM2.17, adding 1.88% to its market cap, now at RM20.52 billion.
Year-to-date, the stock has seen a remarkable 52.4% increase.
Trading volume surged to 26.9 million shares, well above the 90-day average of 10.21 million shares, making it one of the top 20 most actively traded stocks on Bursa Malaysia. At RM2.17, MR DIY is trading at a P/E multiple of 35.23 times, close to its historical range of 36.6 times.
BIMB Securities noted that a P/E ratio of 35x is justified, given MR DIY's leading position in Malaysia’s home improvement and retail sectors. Factors driving its upside potential include steady store expansion and its investment in KKV, a lifestyle retail chain from China.
Additionally, analysts anticipate that consumer spending could rise due to EPF Account 3 withdrawals and the civil servant wage hike, benefiting MR DIY, whose average basket size is RM26.
Affin Hwang Investment Bank highlighted the commonality of high P/E multiples for large-cap consumer stocks in Malaysia, upgrading MR DIY to a 'buy' rating with a target price of RM2.50, up from RM1.97, based on discounted cash flow projections.
Of the 15 analysts tracking the stock, 13 have 'buy' ratings, while two suggest 'hold'. The average 12-month target price is RM2.41, with several analysts revising their target prices upward following the company's latest earnings announcement.
MR DIY’s 2QFY2024 revenue rose 8.7% to RM1.2 billion, while net profit grew 3.2% to RM155.2 million.
Furthermore, the company is expected to benefit from a stronger ringgit against the Chinese yuan, as 60% to 70% of its products are sourced from China. Affin Hwang estimated that for every 1% appreciation in the ringgit, earnings could rise by 2% to 3%.
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