MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained its POSITIVE call on the consumer sector, citing robust performance in the first quarter of 2025 driven by festive spending and ongoing resilience in retail demand. The research house continues to favour Fraser & Neave Holdings Bhd (F&N) with a target price of RM32.68, Aeon Co (M) Bhd at RM1.77 and Life Water Industries Bhd at RM1.00, while it downgraded Oriental Kopi to Neutral and upgraded Spritzer Bhd to Buy on valuation grounds.

In its latest sector update, MIDF Research noted that Malaysia’s retail trade grew 4.7% year-on-year in April to RM66.76 billion. This followed stronger growth in March at 6.6%, reflecting a typical post-Hari Raya normalisation. Despite a mild month-on-month pullback of 0.3%, the research house said cumulative retail trade in the first four months of 2025 still expanded by 6.3% to RM265.02 billion, anchored by firm household spending and stable macro fundamentals.

Labour market strength continues to support the sector. Malaysia’s unemployment rate eased to 3.0% in April, the lowest since the pandemic began. Combined with firm wage growth and relatively low inflation headline CPI remained at 1.4% year-on-year and core CPI rose marginally to 2.0%, household purchasing power remained intact. The house highlighted that this environment helped sustain both essential and discretionary spending.

The research firm also pointed to continued momentum in tourism as a catalyst for the broader consumer sector, with increasing tourist inflows contributing positively to retail and F&B segments. Meanwhile, the appreciation of the ringgit in May was viewed as a supporting factor for cost stability, particularly for import-heavy sectors like food and beverage.

MIDF Research noted that policy normalisation is underway for poultry, with cost trends generally supportive. In the F&B space, mixed commodity trends were observed, though sugar and wheat showed cost relief, which could benefit manufacturers’ margins in upcoming quarters.

Looking ahead, the consumer outlook remains constructive. MIDF Research expects retail demand to stay resilient, supported by structural drivers such as civil service wage increases, adjustments in minimum wages, targeted government cash assistance and the ongoing tourism recovery. These factors are likely to offset uncertainties from external macroeconomic risks and sustain private consumption.

Aeon continues to stand out as a preferred pick due to its defensive nature, strong positioning in the mass-market retail space and recurring income from property management services, which MIDF believes offer a stable earnings base across market cycles.

Related