Analysts flag Nestle, F&N, Farm Fresh, Mr DIY as stimulus winners
CIMB Securities said food and beverage (F&B) producers like Nestle (M) Bhd, Fraser & Neave Holdings Bhd, QL Resources Bhd, and Farm Fresh Bhd are likely to benefit from increased demand for staple F&B products, many of which may be eligible for purchase using the RM100 credit.
"Other retailers such as Mr DIY Group (M) Bhd, Padini Holdings Bhd, Aeon Co (M) Bhd, Yoong Onn Corporation Bhd, Bonia Corporation Bhd, Berjaya Food Bhd, and 7-Eleven Malaysia Holdings Bhd, could see improved footfall and higher spending per customer as disposable incomes increase, amplified by the recent 25 basis point overnight policy rate cut to 2.75 per cent," it said.
CIMB Securities said that within the consumer sector, it remains in favour of companies that benefit from the steady demand for everyday essentials and are well-positioned to tap into consumer downtrading by targeting the mass-market segment.
It expressed a positive view on the consumer sector following Prime Minister Datuk Seri Anwar Ibrahim's recent announcement of new fiscal support measures.
However, the research house is maintaining its current earnings forecasts, noting that the fiscal measures are already in line with its existing revenue growth assumptions for the companies under its coverage.
It reiterated a "Neutral" stance on the sector, which is trading at 27.2 times one-year forward price to earnings ratio, slightly more than one standard deviation below its five-year average of 29.1 times.
CIMB Securities said current valuations appear reasonable, given the backdrop of subdued consumer sentiment, higher sales tax on discretionary goods, ongoing boycott-driven impact on certain companies such as Nestle (M) and Berjaya Food, as well as cost pressures from the widened Sales and Service Tax on rental expenses.
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