by Ronnie Teo, ronnieteo@theborneopost.com. Posted on September 26, 2013, Thursday
KUCHING: RHB Research Institute Sdn Bhd (RHB Research) believes Malaysian consumer players will play a good proxy role to regional growth, allowing more room for growth with a younger growth profile.
The research firm met up with investors at its joint consumer sector marketing sessions in Singapore and Malaysia this month.
From the meet, the research firm noted that investors were generally more interested in our mid- to small-cap ideas in Malaysia, as the large-cap stocks are trading at the higher end of their valuations.
“Malaysia’s consumption thesis is still intact. Indonesia and the Philippines, which are still in early growth stages, have the most attractive consumer sectors in the Asean region,” highlighted analyst Ngo Siew Teng.
“While the more mature consumer sectors in other countries are seeing slower growth, Malaysia’s long-term consumption growth is still intact due to its young population profile (48 per cent below the age 25 v ersus Indonesia’s 45 per cent and Thailand’s 36 per cent).”
Ngo expects medium-term headwinds to come in the form of the goods and services tax (GST), which could be announced in the upcoming 2014 Budget and be implemented in 2015.
“Consumer sentiment may be dampened during the early stages of the GST implementation, primarily due to a lack of awareness and expectations of higher inflation, although we expect consumer spending to normalise after the gestation period.”
Meanwhile, the RHB Research analyst noted that Malaysian consumer players could make a good proxy to regional growth.
“Generally, clients like our ideas on QL Resources Bhd for its high growth stemming from its regional expansion and the recovery of poultry margins,” Ngo highlighted. “We are positive that the group is on track to deliver stronger earnings in the coming quarters.
“Another top pick, NTPM Holdings, appears to be receiving more attention since our last marketing sessions in June. Investors were pleased to know that the group’s new plant in Vietnam is slated to be ready mid-CY14, in addition to it plans to penetrate into the Thai market in the near term.”
Ngo outlined that Singapore-based clients also expressed more interest in the multi-level marketing (MLM) players, such as Amway, Hai-O and Zhulian.
With this move, RHB Research maintained neutral on the sector, suggesting that investors buy on share price weakness, especially stocks that offer good dividends.
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