Fig. 1: Indonesia’s 514 regencies and municipalities GDP/capita (2024, USD) divided into four different tiers

Fig. 2: Number of stores covered by retailers in Tier 1-4 regencies and municipalities based on GDP/cap as of 1H25 - MDIY is the most well-penetrated discretionary retailer across tiers in Indonesia

Fig. 3: Number of regencies and municipalities covered by retailers across Indonesia (out of 514) as of 1H25 – MDIY covered the most regions compared with other discretionary retailers

What we find common between MR.DIY and mini-market players is their focus on offering relatively basic, everyday products. This product mix keeps their offerings relevant and drives more consistent customer traffic, as compared with typical discretionary retailers. While mini-markets primarily focus on groceries, MR.DIY offers essential home improvement items such as home organization products and hardware tools, while gradually expanding its offerings to include jewelry, cosmetics, and toys.

Furthermore, MR.DIY’s core value proposition—Hemat (Economical), Lengkap (Complete), and Dekat (Proximity)—has been instrumental in enabling its successful expansion into tier-three and tier-four cities. The company effectively provides a modernized version of traditional home improvement retailing by offering affordable prices, a comprehensive product range, and convenient store locations close to residential areas. This strategy mirrors how mini-markets have modernized conventional mom-and-pop grocery stores through a similar value proposition.

Significant upside from modernizing general trade

Indonesia’s mini-market expansion has been one of the most successful examples of modern trade transformation. According to Nielsen, mini-markets’ penetration into the FMCG market by trade channel reached nearly 40% as of 1H25. Meanwhile, a study by Frost & Sullivan estimates Indonesia’s home improvement retail market size at USD1.52bn (IDR25.2n) in 2024, with a broader total addressable market for MR.DIY of ~USD20.1bn (IDR334tn), which includes the non-grocery retail segment excluding department stores, flower shops, and others. Based on this, MR.DIY holds approximately 30% of the home improvement retail market and 2% of the overall non-grocery retail market—an impressive achievement given that the company only opened its first store in 2017. We believe its continued expansion into cities across different tiers will further support market share growth, going forward.

Proven track record – globally

Although MR.DIY’s presence in Indonesia is relatively recent compared with other established retailers, the brand has been operating in Malaysia since 2005 and has since expanded to over 5,000 stores across 13 countries. According to MR.DIY, the company is guided by its “Always Low Prices” philosophy, and remains committed to its mission of offering everyone, everything, every day, at affordable prices. The company operates under a consistent global business model—each store typically spans around 10,000 sq ft and carries approximately 18,000 SKUs. These products are sourced in bulk through a centralized procurement system, enabling MR.DIY to secure competitive costs and gain insights into evolving consumer trends. Such efficiencies help sustain healthy gross margins, while ensuring relevance to customer preferences. Additionally, MR.DIY utilizes data analytics to optimize product assortments and store layouts based on local demand (Fig. 21). Together, these strategic advantages have fueled MR.DIY’s rapid growth, making it one of the fastest-expanding retailers by store count in Indonesia (Fig. 23).

The most profitable retailer in Indonesia

Given its ability to reach a wide spectrum of customers across different income tiers and its proven business model supported by global success, MR.DIY stands out as the most profitable Indonesian retailer in terms of ROE (Fig. 4 to 7). Breaking it down, MR.DIY’s high net margin—the highest in the industry in Indonesia—more than offsets its relatively low asset turnover and conservative leverage, as compared with peers. While market concerns mainly center on its valuation, which appears expensive relative to competitors (Fig. 9), we believe that its superior sales growth, strong profitability, and ability to expand across all city tiers in Indonesia justify the premium valuation.

Fig. 4: 2023-2027F retailers’ return on equity (ROE) – highest in the industry

Fig. 5: 2023-2027F retailers’ net margin – highest in the industry

Fig. 6: 2021-2024 retailers’ asset turnover – relatively low given the nature of longer inventory days product

Fig. 7: 2021-2024 retailers’ equity multiplier – MDIY is the least leveraged in 2024 but still commands such high ROE

Investment risks

Strategic risk

MR.DIY Indonesia is heavily dependent on MR.DIY Group Berhad (MDGM), a company listed on Bursa Malaysia and sharing common substantial shareholders, for various shared services. These include merchandise and product procurement for most SKUs sold in its stores—covering activities such as ordering, price negotiation, and other contractual arrangements with suppliers and manufacturers on behalf of the company—as well as logistics management and consultancy services. Consequently, the termination of any contractual agreement between the two parties would pose a significant strategic risk to MR.DIY Indonesia’s future operations.

Supply-chain risk

MR.DIY relies heavily on products sourced from international suppliers and on shipping aggregators for consolidation, warehousing, and coordination of import purchases, making the company vulnerable to disruptions in global supply chain networks. Domestically, MR.DIY operates a single centralized distribution center, creating concentration risk. However, this model is not unique—Azko (ACES IJ, Buy) also uses a similar centralized warehouse system. Additionally, MR.DIY depends on third-party delivery service providers to transport products from its distribution center to stores. The company should continue investing in strengthening its supply chain system, including expanding and upgrading distribution centers and adopting advanced technologies to support long-term growth.

Competition risk

MR.DIY’s extensive presence across multiple city tiers in Indonesia differentiates it from other discretionary retailers. The company’s primary competition comes from traditional mom-and-pop stores, as MR.DIY seeks to modernize the home improvement retail sector through affordable pricing and a diverse product range. Although there are overlaps in product offerings with players such as Niceso (unlisted), Miniso (unlisted), and Azko, we believe these companies are still focused on capturing market share from traditional trade channels rather than directly competing with one another. Furthermore, the relatively low penetration of e-commerce in ex-Java areas has supported MR.DIY’s expansion into these regions. However, any aggressive expansion of e-commerce platforms into ex-Java markets could present a potential competitive risk for MR.DIY.

Currency risk

With more than 70% of its inventory sourced through imports, MR.DIY is inherently exposed to fluctuations in the IDR against the USD. Since IDR serves as the company’s functional currency in Indonesia, any depreciation of the currency could lead to higher product procurement costs. There is no guarantee that MR.DIY will be able to fully pass on these higher costs to customers, which could result in gross margin compression.

Valuation

Ability to tap wider populations warrants premium valuation

We derive our TP of IDR1,500 based on the discounted cash flow to firm (DCFF) method, using a risk-free rate assumption of 6%, equity risk premium of 7.3%, and a terminal growth rate of 3%. This results in a WACC of 9.5%. At our TP, the stock implies 2026F P/E of 27x. Currently, the stock trades at 19.2x 2026F P/E. We believe the P/E premium appears justified as retailers with the ability to penetrate wider regions in Indonesia also trade at fairly high multiples (AMRT at 20x and MIDI at 15x). MDIM (MRDIY MK, Buy) trades at 22x 2026F P/E, despite a lower growth expectation of 10% revenue/NPAT CAGR over 2025F-2027F. We forecast MDIY’s 2025F-27F revenue/NPAT CAGR at 22%/24% and 2026F ROE at 27%, higher than average industry growth of 13%/21% and ROE of 21%.

Industry overview

Rising momentum in non-grocery retail

Indonesia’s retail sector is expanding rapidly, with the non-grocery segment sustaining stronger growth than grocery, with an estimated 2018–28E CAGR of 11% vs 9% (Fig. 10). The current non-grocery market was valued at USD30bn in 2024, reflecting a shift toward discretionary and lifestyle spending. The diverse mix of categories—including household supplies, jewelry, and home lifestyle products—highlights the segment’s resilience and potential for expansion driven by evolving consumer preferences, urbanization that continues to grow (Fig. 11), and rising disposable incomes (Fig. 12).

According to Frost & Sullivan, the household goods retail segment is projected to post the fastest growth among selected non-grocery categories over 2023–28E, supported by a low capex store model and fast-moving, low-ticket product mix. We believe MDIY is well positioned to capture this trend as it participates in eight of nine relevant sub-categories (USD12.3bn market; Fig. 13), offering ~18k SKUs across 10 categories, and has broad reach spanning Tier-1 through Tier-4 cities, enabling stronger penetration vs peers.

Fig. 10: Retail store market size (USDbn)—non-grocery retail category is expected to book higher growth

Fig. 11: Urbanization (%)—indication of potentially more discretionary spending, particularly in lower-tier cities

Fig. 12: Disposable income per capita (USD/cap)

Fig. 13: Non-grocery retail industry market size (USDmn)—recorded an 11% CAGR for 2021-24 and expected to record 9% CAGR for 2024-28F

The expansion of one-dollar retail chains such as Miniso, Niceso, and MR.DIY is closely aligned with the growing middle-income segment in Southeast Asia, which constitutes their core customer base (Fig. 14). The segment seeks affordable yet reliable products and shows a clear preference for organized retail formats offering convenience, assortment, and value. Supported by rising consumer spending (Fig. 15), one-dollar concept stores have effectively captured this demand by providing a broad range of household, personal care, and lifestyle products at accessible price points. Considering both the industry’s structural growth and the sustained uplift in spending capacity, we believe MDIY continues to have substantial room for further expansion (Fig. 16 and 17).

Fig. 14: Middle income household (%)

Fig. 15: Consumer spending per capita (USDmn)

Fig. 16: MDIY market share in household goods industry

Fig. 17: MDIY market share in non-grocery retail industry

Business overview

Few succeed where many fail

Many businesses tend to avoid smaller-tier cities in Indonesia due to concerns over product relevance and limited consumer purchasing power. This has led to intense competition among businesses to capture the dominant Java market, which currently accounts for nearly 60% of Indonesia’s population and total GDP. However, despite entering the market later than other retailers, MR.DIY views the underpenetrated ex-Java regions as a key growth opportunity. Its core value proposition—Hemat (Economical), Lengkap (Complete), and Dekat (Proximity)—aligns well with the cost-sensitive nature of lower-income consumers by offering affordable, wide-ranging products with strong accessibility through proximity. With a presence in 416 out of 514 cities (80%) across Indonesia—nearly matching mini-market penetration—we believe MR.DIY’s success after surpassing its 1,000-store milestone in 2Q25 has inspired Azko to launch a similar concept, “Neka,” aimed at expanding its reach beyond Tier-1 and Tier-2 cities.

The largest competition is the traditional trade channel, not modern trade

While the market often perceives MR.DIY’s presence as a threat to Azko or other one-dollar-store formats, we see it differently. Our discussions with retailers indicate that the biggest growth opportunity lies in capturing demand from traditional retail channels through modernization. In Neka’s (unlisted) case, management views MR.DIY as a pioneer in introducing home improvement retail in lower-tier cities—helping to educate consumers and foster familiarity with modern retail formats. Consequently, Neka believes it can grow alongside MR.DIY by expanding into areas where modern home improvement retail remains underdeveloped.

Low e-commerce penetration is an opportunity for MR.DIY

MR.DIY also benefits from the relatively low e-commerce penetration in smaller-tier cities. Data from the Indonesia Statistics Bureau (BPS) in 2023 show that 75% of e-commerce transactions occur in Java, with 90% of sellers being SMEs—making e-commerce players less incentivized to invest in logistics infrastructure ex-Java due to high costs. This results in expensive delivery fees for outer islands, making modern-trade retailers such as MR.DIY, which offer a complete and affordable product range, more attractive to consumers as compared with online alternatives in ex-Java.

Plug and play – repeating its global success footprint

As one of the largest retail chains with a strong presence across Southeast Asia, MR.DIY leverages its bulk procurement strategy to secure highly competitive pricing, while sharing customer trend insights across regional operations. Its standardized store expansion model, refined through experience in multiple countries, enables fast and efficient growth. Moreover, MR.DIY relies heavily on data analytics in daily operations (Fig. 21), ensuring its product mix remains relevant to customer preferences, while continually enhancing operational efficiency. The company demonstrates proven store economics, with store-level payback achieved within three years.

Financial analysis

Store expansion driving revenue growth

We forecast MR.DIY’s revenue to deliver a 22% CAGR from 2025F to 2027F, reaching IDR12tn in 2027F (vs IDR8tn in 2025F) mainly driven by robust store expansion, with SSSG estimated to moderate at 5% CAGR over 2025F-27F. We expect MR.DIY to add roughly 270 net stores per year, translating into 810 new outlets over 2025–27F (vs. 637 additions during 2022–24), with further push into lower-tier cities in Indonesia. MR.DIY’s target is to operate 2.2-2.5k stores over the next five years. The company already has a broad footprint, covering 37 out of 38 provinces and 416 out of 514 cities, and is poised to deepen penetration in still-under-penetrated areas. Supported by Indonesia’s expanding middle-income population, strengthening consumer spending, and strategy of taking more market share from the traditional retail sales channel, these dynamics underpin MDIY’s sustained growth trajectory and reinforce its leadership in the non-grocery retail segment.

Fig. 22: Revenue forecast – 22% CAGR from 2025F to 2027F, the highest growth for Indonesia retailers

Fig. 23: Store expansion – targets to operate 2.2-2.5k stores over the next five years

Maintaining a stable margin profile

We expect MDIY to have a stable GPM of 55% from 2025F to 2027F (Fig. 24), as it has reached the highest margin compared with the other retailers (Fig. 25). In addition, we see room for incremental upside as the company continues to refine procurement discipline and leverage scale through bulk purchasing, which could unlock further cost efficiencies and support margin outperformance vs current expectations.

However, we anticipate operating expenses to sales to remain flattish during 2025–27F (Fig. 26), as MDIY continues its aggressive store expansion. Salaries and allowances, being the largest opex component, represented 40% of the company’s total opex in 2024. The company’s workforce is expected to increase from 11.9k employees in 2025F to 16.7k in 2027F, in line with the growing number of stores.

We expect MR.DIY to sustain a healthy level of profitability, with net profit margin projected to reach 15.3% by 2027F, supported by robust top-line expansion and margin stability. The combination of scale benefits, disciplined cost control, and a low-price/high-turnover model should allow the company to sustain profitability even as store expansion continues. On this basis, we forecast NPAT to compound at 24% over 2025F–27F, while ROE is expected to remain consistently high at 27% (Fig. 29), reflecting strong capital efficiency.

Fig. 24: Gross profit trend – remains steadily at 54-56%

Fig. 25: 2024 MDIY GPM compared to retailers peers – highest in the industry

Fig. 26: Opex-to-sales trend

Fig. 27: EBIT and EBITDA margin trend

Fig. 28: Net profit trend

Fig. 29: Return on average asset and equity (ROAA and ROAE) trend

Deleveraging and stable free cash flow (FCF)

We forecast MR.DIY to return to a net cash position by 2027F, underpinned by strong operating cash generation and steady deleveraging, which will reduce net gearing over the forecast period (Fig. 30). While the company currently records negative free cash flow due to its ongoing store expansion cycle, we expect FCF to turn positive in 2026F (Fig. 31). The recovery in free cash flow should coincide with an acceleration in share price growth, a pattern similar to other scaled retailers such as AMRT and MAPI (Fig. 32-33)

Regarding capital expenditure, we estimate total capex including leases of IDR1.9tn in 2025F largely allocated to network expansion with an addition of roughly 270 stores at an average cost of ~IDR5bn per store. We expect the expansion to be fully funded through internal cash flows, consistent with MR.DIY’s cash-generative operating model. We believe MDIY’s free cash flow will continue to grow beyond 2025F, supported by the improving performance of its existing store base.

Fig. 30: Net debt (IDRbn) and gearing (x) trend

Fig. 31: MDIY’s free cash flow trend (IDRbn)

Fig. 32: AMRT’s free cash flow (IDRbn) and share px (IDR, RHS)

Fig. 33: MAPI’s free cash flow (IDRbn) and share px (IDR, RHS)

Dividend policy

We assume a 40% dividend payout ratio through 2027F, consistent with the company’s policy of maintaining a minimum payout of 40%. We believe there is potential for an increase in the payout ratio once the company achieves a more stable and growing free cash flow profile and reduces its working capital debt position.

Ownership structure

Fig. 34: MR.DIY’s ownership structure as of 9M25

Management structure

Board of commissioners

Ong Chu Jin Adrian — President Commissioner

Mr. Ong Chu Jin is a Malaysian citizen; he has been serving as the company’s President Commissioner since 2024, following his election at the company’s Annual General Meeting of Shareholders. He holds an MBA degree from the University of Cambridge and is a member of the Institute of Chartered Accountants in England and Wales, as well as the Malaysian Institute of Accountants. He currently serves as Non-Executive Chairman of MR D.I.Y. Thailand, Independent Director at Maxis Berhad, and holds directorships in several companies including MR D.I.Y. Group and Azura Alpha Sdn. Bhd. Mr. Ong has no affiliation with other board members or major shareholders, though he is an indirect shareholder through Agave Suciama Sdn. Bhd.

Darwin Cyril Noerhadi — Commissioner

Mr. Darwin Cyril Noerhadi, an Indonesian citizen, was appointed as the company’s Commissioner in 2024. He holds a Doctorate in Strategic Management from the University of Indonesia, and an MBA degree in Finance and Economics from the University of Houston. He has held various senior roles, including President Director at Creador Regional Private Equity, President Commissioner of PT Mandiri Sekuritas, and Director & CFO at PT Medco Energi Tbk. Currently, he serves on several boards including PT Medikaloka Hermina Tbk, PT Nitaga Indonusa Yasa, and PT Rantai Oxygen Indonesia. Mr. Noerhadi has no affiliation with other board members or controlling shareholders.

Loo Chong Peng — Independent Commissioner

Mr. Loo Chong Peng, a Malaysian citizen, was appointed as the company’s Independent Commissioner in 2024. He holds a Mini MBA from Singapore Management University and a Bachelor of Science in Computer Science from the University of Arkansas. He has extensive experience in leadership roles, including Director and Head of Trading at Cergas Energy Ltd, Managing Director at Synergy Energy Labuan Ltd, and Executive Director at Mercuria Resources Enterprise Co Ltd, Thailand. He also served as Managing Director of Sun Microsystems Malaysia Sdn Bhd and COO of Ayala Systems Pte Ltd. Mr. Loo Chong Peng has no affiliation with other members of the Board of Directors or controlling shareholders.

Istini Tatiek Siddharta — Independent Commissioner

Ms. Istini Tatiek Siddharta, an Indonesian citizen, was appointed as the company’s Independent Commissioner in 2024. She holds an MBA (Fred Weston Award for Excellence in Finance) from the Anderson School of Management, University of California, Los Angeles, and a Bachelor’s degree in Accounting (cum laude) from the University of Indonesia. She has extensive experience in accounting and finance, having served as Director at PT Austindo Nusantara Jaya Tbk, Representative of the Consultative Board of Financial Accounting Standards (DSAK), and Partner at Siddharta Siddharta & Harsono (KPMG). Currently, she is Chairperson of the Audit Committee of the company and has no affiliation with other members of the Board of Directors or controlling shareholders.

Board of directors

Edwin Cheah Yew Hong — President Director

Mr. Edwin Cheah Yew Hong, a Malaysian citizen, was appointed as the company’s President Director in 2024. He holds a Master of Science in International Management from King’s College London and a Bachelor of Engineering in Electronic and Communications Engineering from the University of Bristol. He has extensive leadership experience, including serving as Executive Director of Creador. Currently, he serves as President Director of PT Kreasi Indah Varia and Director of both Azaya Saliamina Sdn. Bhd. and Azara Alpina Sdn. Bhd. Mr. Edwin Cheah Yew Hong has no affiliation with other members of the Board of Commissioners or Directors or with controlling shareholders.

Rika Juniaty Tanzil — Director

Ms. Rika Juniaty Tanzil, an Indonesian citizen, was appointed as the company’s Director in 2024. She holds a Master of Management in Financial Management and a Bachelor’s degree in Accounting from Universitas Tarumanagara, as well as certifications as a Chartered Accountant (CA) and Certified Public Accountant (CPA).  Currently, she serves as Commissioner of PT Daya Indah Sejahtera, PT Daya Indah Cendani, PT Daya Indah Andalan, and PT Daya Indah Nawasana, as well as President Director of PT Duta Sentosa Yasa and Director of PT Kreasi Indah Varia. Ms. Rika Juniaty Tanzil has no affiliation with other members of the Board of Commissioners or Directors or with controlling shareholders.

Frida Herlina Marpaung — Director

Ms. Frida Herlina Marpaung, an Indonesian citizen, was appointed as the company’s Director in 2024. She holds a Bachelor of Banking and Finance from Monash University, Australia, and a Victoria Certificate of Education from Wesley College, Australia. She has extensive experience in human resources and management, having served as Chief People Officer at PT Sari Burger Indonesia (Burger King Indonesia), HR Director at PT aCommerce Sustainable Solutions, and Head of HRGA Indonesia and Thailand at Groupon Indonesia. Ms. Frida Herlina Marpaung has no affiliation with other members of the Board of Commissioners or Directors or with controlling shareholders.

Hendra Kurniawan — Director

Mr. Hendra Kurniawan, an Indonesian citizen, was appointed as the company’s Director in 2024. He holds a Master of Management–Master of Business Administration from Pelita Harapan University and a Bachelor of Civil Engineering from Tarumanagara University. Currently, he serves as President Director of PT Duta Intiguna Yasa and PT Duta Sentosa Yasa, as well as President Director or Director in several affiliated companies under the Group. Mr. Hendra Kurniawan has no affiliation with other members of the Board of Commissioners or Directors or with controlling shareholders.

Michael — Director

Mr. Michael, an Indonesian citizen, was appointed as the company’s Director in 2024. He holds a Bachelor of Architecture from Institut Teknologi Indonesia and has extensive experience in property management and development. Currently, he serves as Commissioner of PT Niaga Seraya Maju and Director at several affiliated companies under the Group. Mr. Michael has no affiliation with other members of the Board of Commissioners or Directors or with controlling shareholders.