KUALA LUMPUR, April 28 (Bernama) — MIDF Research remains bullish on Malaysia’s consumer sector, premised on the stable labour market that supports domestic consumption, high tourist movement, better margins for food and beverages producers and a stronger ringgit outlook.
In a note today, the research house said it continues to prefer consumer staple-related companies as the top picks for the sector due to resilient demand for essential items despite multiple headwinds, naming QL Resources with a target price (TP) of RM6.80, F&N (TP: RM33.50), and AEON (TP: RM1.90).
Additionally, MIDF Research projected the retail trade to remain positive in 2023 due to the overnight policy rate remaining below the pre-pandemic level, easing inflationary pressures and a stronger labour market.
It said the upward trajectory would also be supported by various assistance and incentives for the B40 and M40 income groups under Budget 2023 to support household consumption, as well as a pick-up in tourism activities — both leisure and business-related — that would further boost retail trade spending.
“All in, we believe that strong retail sales in 2023 will benefit retailers like Aeon Co (TP: RM1.90) and Padini (TP: RM4.40),” the research house said.
Meanwhile, on the raw material prices in terms of feedstock, it anticipates that the price of chicken feed will remain high in the near future despite the recent drop in the average corn price.
“Going forward, we reckon the margin compression for poultry players will persist in the near term due to increased labour expenses as well as the continuing price cap for retail chicken and eggs,” it said.
It added that higher raw sugar costs are projected to be manageable by food producers due to relatively low sugar consumption compared to wheat and crude palm oil, as well as numerous pricing modifications adopted in the previous year that was expected to offset the cost increase.
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