Malaysia: Consumer sector to ride on resilient demand and tourism

PETALING JAYA: The outlook for the consumer sector remains positive with robust retail trade projected following increased tourism activities and resilient demand for staple-related products.

According to MIDF Research, retailers such as Aeon Co (M) Bhd, Padini Holdings BhdQL Resources BhdFraser & Neave Holdings Bhd (F&N) should benefit from the upward trend in retail sales this year.

The research firm said an uptick in the movement of local and international tourists could also boost sales for convenience stores such as FamilyMart under QL.

It expects the group’s sales being further supported by the consistent demand for marine and livestock products.

MIDF said F&N is poised to benefit from the rising demand in ready-to-drink beverages with an increase in tourist arrivals.

For Aeon, it expects strong demand for its general merchandise stores and supermarkets.

MIDF said the consumer sector is a “defensive play” with solid profit margins for food and beverage (F&B) producers following falling raw material prices, which could offset other cost pressures.

For poultry players, the normalised commodity prices for livestock feed are likely to alleviate input costs.

However, given that F&B and poultry manufacturers purchase their raw materials in US dollars, the depreciation of the ringgit is anticipated to raise input costs.

Nevertheless, export-focused companies such as Asia File Bhd and Rhong Khen International Bhd will gain from the stronger US dollar as most of its sales are done in that currency.