Ahead of RM1.5b IPO, Mr DIY sets sights on growing Malaysia footprint

Kuala Lumpur

MALAYSIAN home improvement retailer Mr DIY Group - which officially lists on Monday in what is the country's largest initial public offering (IPO) in three years - is eager to continue expanding its physical footprint in a big way.

Mr DIY will focus on growing and expanding Malaysian operations by opening at least 132 new stores in 2020 and approximately 175 additional stores in 2021 within the country.

The company - with operations in Brunei, Thailand, Indonesia, the Philippines and Singapore - believes that the local home improvement retail sector is still under-penetrated.

"We intend to open at least 30 Mr DIY stores, eight Mr Toy stores and eight Mr Dollar stores by the end of the year," said chief executive officer Adrian Ong in an interview with The Business Times.

Mr DIY is a popular store to pick up home essentials, while Mr Dollar is where customers go to stock up on snacks, drinks and food items that are priced at either RM2 (S$0.66) or RM5. Mr Toy sells toys at low prices.

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According to a report by Frost & Sullivan, there are only 216.3 home improvement retail stores to one million people in Malaysia, as compared to Australia's rate of 405.3 and Japan's 236.6 as of Dec 31 last year.

The report also expects Malaysia's home improvement retail sector to grow at a compounded annual growth rate (CAGR) of 10.2 per cent from RM7.7 billion to RM12.5 billion between 2019 and 2024.

Frost & Sullivan also indicated that Malaysia's home improvement retail sales per capita is lower than its Asean peers such as Singapore, Thailand and Vietnam. It expects the retail sales value of the home improvement retail market to expand from RM7.7 billion in 2019 to RM12.5 billion in 2024.

"Like most businesses, our operations have been affected by the Covid-19 pandemic.

"However, we saw an increase in revenue since the reopening of our stores, higher than January and February's performance, where revenue for the months of May and June increased to RM233.5 million and RM232.1 million respectively," said Mr Ong.

He added that the rebound in the group's revenue after the lockdown has been "encouraging", reflecting the resilience of its business since the start of the year.

"Besides attractive prices that allow us to continue delivering positive sales growth, we have also ventured into e-commerce since 2018 to capitalise on the current trend of more shoppers adapting to online shopping. We have been able to deliver an omnichannel shopping experience to our customers," said Mr Ong.

However, he reiterated that Mr DIY's business has been and will continue to grow in the brick-and-mortar segment, and they are expanding the product range to cope with demand.

Currently, their products can also be purchased on third party e-commerce retail platforms such as Shopee and Lazada.

Mr DIY's IPO listing has gone through a few delays. It earlier intended to list in the second quarter of this year but pushed back those plans due to concerns over the Covid-19 pandemic at that time.

Earlier this month, however, the retail company announced that it was opening its books for RM1.5 billion at RM1.60 per share, making it the largest IPO in Malaysia since Lotte Chemical Titan raised RM3.77 billion in July 2017.

The company will be listed on the main market of Main Market of Bursa Malaysia Securities Berhad on the morning of Oct 26.

Offering up to 941.5 million shares, representing around 15 per cent of its enlarged issued share capital, Mr DIY plans to use the IPO proceeds mainly to repay bank borrowings.

Asked about going public in a difficult business environment, Mr Ong responded that the preparation work for the listing has been in motion for quite some time now and it has been a collective effort by the Mr DIY team, advisers and regulators.

"We are financially sound - our revenue and net profit recorded a CAGR of 36.1 per cent and 23 per cent respectively from 2017 to 2019," he said.

"Besides that, we have also received strong backing from credible cornerstone investors locally and internationally, who have confidence in our growth prospects."

Mr DIY's prospectus showed more than 12 cornerstone investors including funds under BlackRock, Matthews, Aberdeen Standard Investments, Fidelity Investments, JPMorgan Asset Management, AIA and Affin Hwang Asset Management.