KUALA LUMPUR: The domestic retail sector is expected to maintain its growth trajectory throughout the rest of this year, said MIDF Research.
In a note today, the investment bank said the growth will be underpinned by sustained demand for essential items, the resurgence of out-of-home consumption, and the uptick in tourist arrivals.
“This is expected to encompass non-specialised stores, as well as the food and beverages (F&B), and tobacco segments in specialised stores,” it said.
At the same time, the research house is also optimistic about the consumer sector’s outlook, supported by defensive play due to the resilient demand for staple-related products, solid domestic consumption backed by a stable labour market, robust retail trade and increased tourism activities.
It also expects F&B producers to see better profit margins, driven by declining global commodities prices and previous price hikes, offsetting other cost pressures.
“Additionally, the normalising soybean meal and corn futures prices suggest lower raw material costs for poultry players, further supporting their profit margins,” it said.
The research house’s top picks continue to be consumer staple-related companies that exhibit resilient demand, such as QL Resources, which is supported by consistent demand for marine and livestock products.
“We also like F&N because the company is likely to benefit from the rising demand for ready-to-drink beverages, which is being fuelled by an increase in tourist traffic,” it said. – BERNAMA
