Mr DIY tops the active list on debut day; share price up 9.34%

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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 on the Main Market of Bursa Malaysia.

The home improvement retailer topped the stock exchange's list of most traded counters. The trading volume on its maiden trading day was at 410.15 million shares, which is equivalent to 43.5% of its free float of roughly 941.49 million shares.

Mr DIY closed at RM1.75, up 15 sen or 9.4% against its IPO price of RM1.60. However, the gain is relatively low compared with its low liner peers which made their debut on Bursa in the past 12 months. (see table)

The stock started on a soft note. It slipped to an intraday low of RM1.50 shortly after the opening bell. Nonetheless, Mr DIY gained its upward momentum and climbed to an intraday high of RM1.80 — 12.5% higher against its IPO price. With the gain, its market capitalisation swelled to RM10.98 billion.

At a press conference following its virtual listing ceremony, its chief executive officer Adrian Ong said that the group has now welcomed some 9,000 new shareholders.

"As a business [we] are focused with what is important — running our business and the growth that we have set ourselves on a journey of.

"Our business started this year with 593 stores. We have said we will be launching 307 new stores in 2020 to 2021, and that will take us to 900 stores. We are very much on target as we speak. The market continues to work well for us," said Ong.

With the listing of its business, which encompasses operations in Malaysia and Brunei, the group would add more stores in these markets, he said.

The main focus is on growing Mr DIY stores, with the secondary growth driver being the Mr DOLLAR and Mr TOY brands of stores.

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 frank, we are very comfortable in that position, and we feel that even start-ups would be very envious of that level of growth. We intend to concentrate on this and grow that market," he said.

Mr DIY chairman Datuk Azlam Shah Alias said that the Malaysian market is growing, with high urbanisation levels and rising income levels.

"There is a culture of modernisation by embracing the DIY culture among Malaysians," said Azlam.

In terms of capital expenditure, Ong said the 307 new stores would be funded using the "strong cash-generative capability" of the group.

He emphasised that this capability 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 all three brands.

Under today's listing exercise, the retailer raised RM1.5 billion, including RM1.2 billion raised from the offer for sales of shares by its existing substantial shareholders. Mr DIY will be allocating about RM301.4 million to pare down its bank borrowings taken to pay dividends prior to the listing exercise.

Lam Jian Wyn & Kathy Fong