Prime Minister Datuk Seri Anwar Ibrahim stated that the financial assistance programme for B40 income group has been renamed Sumbangan Tunai Rahmah (“STR”) and the first round of payment will start on 17 Jan 2023.
The announcement was not new as Datuk Seri Anwar Ibrahim had previously stated that the payment for Phase 1 of the People’s Cash Aid would start in January 2023 rather than March 2023 to lessen the burden of people on the cost of
living. A total of 8.7m receivers in the B40 income group will get the first round of STR payments, totalling RM1.67b. The
payment will be credited to the accounts of the registered recipients.
A total of 4m households (out of the 8.7m receivers) will receive RM300, which costs the government RM1.2b. Meanwhile, a total of 1.2m senior citizens without spouses will receive RM100 while the remaining 3.5m single individuals will get RM100 each. The STR beneficiaries in rural areas, such as Sabah and Sarawak, would also receive financial assistance on the same date. This is regardless of whether they have bank accounts or not.
MIDF views the move as a positive on the announcement as the allocation of the STR will raise the disposable household income of B40 income group. This would increase consumer spending on necessities amid the current inflationary pressure in the market. The cash assistance will also boost consumer spending ahead of Chinese New Year celebration on 22nd
January 2023. In short, the cash assistance is expected to boost sales for consumer-staple-related companies.
Beneficiaries from this payout are the F&B producers and poultry farmers will benefit from the cash assistance due to inelastic demand for staple food items despite current environment of high inflationary pressure and rising interest rates. F&B producers and poultry farmers that are expected to benefit from the cash assistance are F&N Holdings (BUY, TP: RM29.70), QL Resources (BUY, TP: RM6.30), Leong Hup International (BUY, TP: RM0.80), Spritzer (BUY, TP: RM2.64), Hup Seng Industries (BUY, TP: RM0.79), and Nestle Malaysia (NEUTRAL, TP: RM137.80). Besides, MIDF thinks that AEON Co (BUY, TP: RM1.81) will also benefit from the cash assistance as customers buy necessities at AEON malls.
The announcement of cash assistance says MIDF does not expect to impact earnings projection for consumer companies
under irs coverage as itt had factored in the higher consumer spending into its forecast for CY23. The house maintains its POSITIVE stance on consumer sector due to: (1) steady labour market that supports domestic consumption, (2) positive domestic spending ahead supported by the STR programme to B40 groups, and (3) better margins for food and beverage producers due to lower global commodity prices and a stronger MYR
