PETALING JAYA: The consumer sector is expected to thrive in 2025, underpinned by the revival in tourism, stable employment and increased disposable incomes.
MIDF Research highlighted that the gradual recovery in tourism is set to further fuel retail demand, benefitting consumer staples and general merchandise retailers.
In the third quarter of 2024 (3Q24), retail sales gained momentum, expanding by 3.8% year-on-year (y-o-y), led by the mini market and convenience store subsector, as well as steady growth in department stores, pharmacies and apparel.
“Malaysia’s tourism sector continues to be a critical catalyst for the consumer market, with international tourist arrivals surging to 20.6 million in the first 10 months of 2024 (10M24), compared to 16.1 million in the same period in 2023.
“This marks a significant milestone as the 10M24 figure has already surpassed the total tourist arrivals for 2023 (20.1 million),” it noted in a recent report.
MIDF Research said 2025 promises even greater momentum, fuelled by strategic government initiatives such as global promotions, infrastructure improvements, enhanced accessibility through better connectivity, and a target of 31.4 million visitors with RM125.5bil in tourism revenue.
The research house said preparations for Visit Malaysia Year 2026 will further amplify the sector’s long-term potential, with the aim to attract 35.6 million tourists’ arrival and RM147.1bil in revenue.
“Companies like Spritzer Bhd
are well-positioned to capitalise on the increased demand for bottled water, while Family Mart, under QL Resources Bhd, stands to gain from the rising demand for convenience food driven by the growing number of tourists.
“As Malaysia continues to attract tourists, consumer activity tied to travel and hospitality will continue to provide a solid foundation for sector-wide growth,” it said.
The research house added that Aeon Co (M) Bhd stands out as well-positioned to capture this growth, leveraging resilient domestic demand to drive strong top-line expansion in 2025.
MIDF Research maintained a “positive” outlook on the consumer sector, with top picks including Fraser & Neave Holdings Bhd, with a target price (TP) of RM36.77.
Meanwhile, CIMB Securities noted that among the 14 consumer stocks under its coverage, four posted 3Q24 results that beat estimates, one met expectations, and nine missed estimates.
“We expect most consumer names to post stronger quarter-on-quarter results in 4Q24, (driven by) the impact of festive demand.
“We expect this strong momentum to carry into the first half of 2025 (1H25), as festive demand is likely to be captured in 1H25 owing to the earlier timing of festivities in 2025.
“This will be further supported by the upcoming civil servant salary increase and potential minimum wage hike,” it said.
CIMB Securities has a “neutral” stance on the sector, with Farm Fresh Bhd (TP: RM2.25) and MR DIY Group (M) Bhd (TP: RM2.38) as its top picks.
