Maybank IB said its optimistic view on the consumer sector in 2025 is premised on increased consumer spending momentum thanks to improved disposable income arising from govt supported measures.
However, the house noted that there are cost pressures arising from higher utilities and labour costs though it believes would be manageable. Consumer companies would be focused on building sales volumes to mitigate margin pressures in its view. Within the consumer subsegments, the house believes F&B staples would be best positioned. Three top picks are AEON, MRDIY and FFB.
Double digit earnings growth since 2022
The house projects +15% YoY net profit growth from the basket of consumer stocks under its coverage for 2025E (2024E: -3% YoY) supported by strong macro drivers and govt assistance, boosting disposable income which will enhance consumer sentiment and spending ability. Within its coverage, Maybank IB expects NESZ, FFB and MRDIY to see meaning positive earnings shifts on broad based consumer spending.
Improving business conditions; volume growth focus
Business conditions for consumer staple companies may be in a better state in 2025 given a relatively stronger MYR YoY and significant easing of certain raw material ASPs. With this, the house believes that the general urgency to raise product prices to defend margins are less likely, and companies would instead prioritise sales volume growth to grow earnings. Taking the
cue from historical credit card spending patterns, credit card debt and overdue payment rates have remained low, which could lead to an unimpeded rise in spending from higher consumer disposable income.
Top picks: AEON, MRDIY & FFB
AEON is the top consumer BUY pick. Its stable property management services segment will drive group earnings growth through higher occupancy rates and mall traffic as its mall rejuvenation exercises continue in FY25E. Potential retail segment growth will also arise from an expected boost in consumer spending. The house said it also likes MRDIY and FFB as beneficiaries of higher consumer spending and longer-term earnings prospects from capacity expansion and new product launches respectively.
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