By Ying Xian Wong


Shares of Mr. D.I.Y. Group (M) Bhd. are lower in early trading after the company's second-quarter earnings fell short of some analysts' expectations even though it posted record revenue.

Shares fell as much as 6.0% Friday, taking their year-to-date loss to 9.5%. They were last 5.6% lower at MYR2.19.

The Malaysian home improvement retailer said late Thursday that net profit in the second quarter rose 65% compared with the same period earlier to 35.2 million ringgit ($7.9 million) on an increase in total transactions and contributions from new stores, while revenue rose 38% to a record MYR1.05 billion.

Kenanga Investment Bank analyst Ahmad Ramzani Ramli called the results "disappointing," noting that first-half margins fell partly due to elevated input costs. The bank downgraded the stock to market perform from outperform while maintaining its MYR2.40 target price.

"We expect improvement in margins in the coming quarters due to price adjustments but are cautious on topline for the second half of the year on inflationary concerns," the analyst wrote.

RHB Investment Bank analyst Soong Wei Siang said the results "slightly missed our lofty forecasts despite record [second-quarter] earnings." He cut his target price to MYR2.90 from MYR3.00 but kept a buy rating, saying the bank continues to view Mr. D.I.Y. as a proxy for the recovery in consumer spending and that "the valuation gap vs its large-cap peers should close, premised on the company's superior earnings growth profile and higher trading liquidity."

Hong Leong Investment Bank analyst Syifaa' Mahsuri Ismail, meanwhile, described results as broadly within expectations, highlighting a "commendable expansion" in revenue. The analyst kept a buy rating and an unchanged target price of MYR2.92 on the stock, and added that price increases in recent months "should help to cushion its margin contractions from multiple cost headwinds."


Write to Ying Xian Wong at yingxian.wong@wsj.com


(END) Dow Jones Newswires

08-04-22 2246ET