The consumer sector is poised for growth following the recent tabling of Budget 2025, which aims to enhance household income and sustain consumer spending.
MIDF Amanah Investment Bank Bhd (MIDF Research) has expressed a POSITIVE outlook for the sector, highlighting several key measures designed to support the sector. These include increased allocation in Sumbangan Tunai Rahmah (STR), raising in minimum wages to RM1,700 effective February 2025 and the implementation of targeted subsidies for RON95 petrol at mid-2025 aimed at maintaining price stability for approximately 85% of Malaysians.
MIDF Research has maintained a POSITIVE rating on the consumer sector, identifying Fraser & Neave Holdings Bhd (F&N) as a top pick with a BUY recommendation and a target price (TP) of RM37. AEON Co (M) Bhd is also rated BUY with a target price (TP) of RM1.67. In contrast, QL Resources Bhd has been downgraded to NEUTRAL following a recent surge in its share price, indicating that the positive outlook may already be priced in.
The increased allocation in STR is anticipated to improve household income, helping to mitigate inflationary pressures and encouraging sustained spending on essential goods. Companies like QL Resources and F&N, known for their essential consumer products, are well-positioned to benefit from this trend. Moreover, mid-tier retailers such as AEON and Padini are expected to experience heightened foot traffic and sales volumes as disposable income increases.
The upcoming increment in minimum wage will further enhance purchasing power for many households. Retailers catering to the mass market, particularly brands like AEON and Padini, are likely to gain from the increased financial flexibility consumers will enjoy for non-essential purchases. This anticipated rise in demand for discretionary items, along with stable demand for essential goods, presents a positive outlook for the retail sector.
