The government supports people's expenses AEON, FOCUSP, and QL are expected to break through

Research analysts at Hong Leong Investment Bank pointed out today that although consumer sentiment was relatively low at the beginning of this year, the overall performance of the stocks being tracked was basically in line with expectations.

Despite boycotting pressure on some companies, there are festive festivals that provide support, which can indeed increase consumer confidence and increase profits.

On the other hand, with the exception of cocoa and coffee beans, the prices of major raw materials continue to decline.

Looking at the rest of the year, analysts pointed out that commodity prices will continue to remain at current levels, mainly because global demand is still sluggish, and there is limited room for commodity prices to rise.

Overall, this will benefit catering companies, and profits are also expected to pick up, and various merchants have implemented price increase mechanisms to varying degrees in the past 3 years. Although sales have declined, net profit has indeed increased to a certain extent.

“Due to the weakening of the ringgit and the rising cost of cocoa and coffee beans, it is not ruled out that prices will increase in the future.”

Furthermore, the launch of the third Provident Fund account can all be seen as a catalyst to stimulate disposable income. Coupled with the current withdrawal measures more than two years after getting out of the pandemic, a higher proportion may be spent on discretionary spending rather than investing only in necessities as before.

Furthermore, the third account is also a flexible account, and its high liquidity may drive consumer spending patterns.

In view of this, analysts believe that retailers that provide mid-range and high-end restaurants, as well as non-essential products or services, will benefit from this.

Based on the above, analysts are optimistic about the consumer sector, mainly the gradual moderation of raw material prices, the opening of third accounts and salary increases for civil servants can boost consumption, and the current macroeconomic environment is encouraging, and the employment level is quite stable.

As of April this year, the unemployment rate was 3.3%, the same as in March, and at the same time as before the pandemic.

Analysts added that the current forecast is also in line with the figures given by BMI, a subsidiary of Fitch Solutions, that is, as the economy continues to grow and consumption levels gradually normalize, Malaysian household spending will increase 5% year-on-year to RM903.8 billion this year.

This also means that household spending ratios will return to pre-pandemic growth levels from 2015 to 2019.

Analysts raised the consumer sector rating from “neutral” to “increase holdings”, mainly to be optimistic about the overall trend, while also specifically naming AEON, Focus Glasses, and Quanli Resources.

The analyst added that the reason for naming these 3 companies is mainly that the company's valuation is attractive, and profits are also supported by expansion plans and brand benefits.

As far as AEON is concerned, analysts believe that the company will continue to maintain its strategy of maintaining competitiveness through store renovation and expansion plans, while also maintaining profits by optimizing product supply to match the income levels of the surrounding population.