Consumer sector to gain

PETALING JAYA: Analysts from research houses and fund managers appear to be largely positive on the “Appreciation Package” unveiled by the Madani government on Wednesday, generally agreeing it would provide a short-term boost to the consumer sector.

In addition, they see the benefits likely cascading down to tourism-related industries such as hotels and restaurants, as well as the food and beverage (F&B) sector.

In a strategy report to clients, Hong Leong Investment Bank Research (HLIB Research) reported that the RM100 cash handout is estimated to benefit 22 million Malaysians, involving an allocation of RM2bil.

“As a result, the total allocation for Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara) has increased from RM13bil to RM15bil for this year,” the research house said, adding that the government remains committed to implementing targeted subsidies for RON95 petrol, with full details to be announced by the end of September.

The research house anticipates that the one-off RM100 cash transfer and lower RON95 petrol price for the majority of Malaysians should increase private consumption growth by approximately 0.2 percentage points.

With regards to the potential impact on the country’s fiscal deficit, HLIB Research said the additional cash transfer of RM2bil translates to 0.1% of gross domestic product (GDP), as it also highlighted that the government is also expected to experience some increase in subsidy spending from lowering the subsidised price for RON95 from RM2.05 per litre to RM1.99.

Nevertheless, it said this is expected to be fully offset by the government’s targeted subsidy rationalisation plan, lower oil prices and stronger ringgit.

“At the same time, the government had already implemented the sales and services tax (SST) expansion on July 25 with a target of RM5bil – representing 0.2% of GDP – as additional revenue for 2025.

“Taking all this into account, we maintain our fiscal deficit projection of minus 3.8% of GDP, up from the minus 4.1% of 2024,” said the research house.

Notably, HLIB Research said 99 Speed Mart Retail Holdings Bhd and Aeon Co (M) Bhd would benefit from the handouts, maintaining its “buy” call for both companies with respective target prices of RM2.98 and RM1.82.

It said 99 Speed Mart, with 2,800 outlets nationwide and an average basket size of RM21.40, is particularly well positioned to capture recurring spend from consumers using Sara credits, while Aeon, with its urban footprint and diversified merchandise, may see uplift from middle-income segments with improved purchasing sentiment.

Head of dealing at Moomoo Malaysia, Ken Low, sees consumer staples, F&B, and fast moving consumer goods as the most immediate beneficiaries, before adding that the RM100 cash transfer, wage hikes, and expanded living wage coverage put more cash into lower-and middle-income hands.

“This typically translates into spending on groceries, essentials, and value-tier offerings. We also see telecommunications and quick-service F&B as near-term winners, especially in prepaid-driven or convenience-focused segments,” he told StarBiz.

However, he cautioned that the upside may be short-lived unless sentiment is sustained, suggesting investors to focus on companies with pricing power, efficient cost structures, and strong reach in the value-for-money space.

From a foreign investor perspective, Low believes that Malaysia’s recent ringgit strength, competitive index climb, and solid investment flows suggest that confidence is returning, not because of spending, but because of clearer policy direction.

“That said, execution remains key, as markets are likely to stay selective until the full impact of fuel subsidy reforms is known.

“In our view, the bulk of the ‘relief rally’ sentiment is already priced in, what investors need next is proof of reform credibility and growth delivery,” he said.

Of interest, while selecting popular consumer players such as 99 Speed Mart, Farm Fresh Bhd and Padini Holdings Bhd among its top picks for the sector, with respective target prices of RM2.60, RM2.25 and and RM2.55, CIMB Research is keeping its “neutral” call on the industry.

Explaining from a broader technical view, it said the consumer sector is currently trading at 27.2 times one-year forward price-over-earnings (PE), slightly over one standard deviation below its five-year mean of 29.1 times.

“We believe valuations are fair at this juncture, reflecting ongoing soft consumer sentiment and higher sales tax on discretionary goods, on top of the impact of boycott activities on selected consumer names, and cost pressures from the expanded SST on rental costs,” it added.

Meanwhile, aside from familiar consumer names such as Fraser & Neave Holdings Bhd at a target price of RM32.68 and Life Water Bhd at RM1, MBSB Research has also picked Pavilion Real Estate Investment Trust (REIT) at 1.88 and PETRONAS Dagangan Bhd (PetDag) at RM22.25, respectively, as its picks in the REIT and oil and gas industries.

The research house expects the RM100 cash handout to be positive for retail REITs as it will increase disposable income of the public, improving shopper footfall and tenants’ sales of shopping malls.

Additionally, it believes the demand for RON95 will remain supported due to continuous utilisation for fossil fuel out of necessity.

“While the margins for the dealers through a two-tiered pricing system due to the targeted subsidy are yet to be disclosed, PetDag is expected to be compensated for selling the fuel below market price to eligible consumers, while higher margins are anticipated for the unsubsidised fuel sold to ineligible recipients.

“Initial risks may persist in terms of uptake and utilisation post-implementation of the RON95 targeted subsidy, although we believe PetDag still has the upper hand to mitigate them,” said MBSB Research.

Meanwhile, Tradeview Capital chief investment officer Nixon Wong said the declaration of a special public holiday on Sept 15 may provide a temporary boost to domestic tourism, as the extended four-day weekend encourages travel and leisure spending.

He told StarBiz the “Appreciation Package” could shift public and investor perception of the current administration’s fiscal stance, which has so far been seen as focused primarily on subsidy rationalisation and financial consolidation.

Wong said the move may signal a more balanced approach – one that still accommodates short-term support for the rakyat while preparing for structural reforms.

“It could also lay the groundwork for greater market optimism ahead of Budget 2026, particularly in anticipation of further handouts or potential infrastructure allocations,” he added.

Meanwhile, an analyst with a foreign research outfit opined that QL Resources Bhd may also stand to gain as a major player in consumer staples, including poultry and convenience store chains, which could see higher sales due to increased foot traffic and spending on essentials.

She projected that automotive players MBM Resources Bhd and Bermaz Auto Bhd will also likely benefit from lower RON95 fuel prices that will reduce operating costs for vehicle owners, particularly for the middle and lower-income groups.

“At this juncture, it seems natural that the biggest winners are consumer-facing and infrastructure-related sectors. While these measures are pro-rakyat, the government’s long-term credibility also depends on how well they are balanced with fiscal reforms.

“Foreign investors may not react negatively now – but they are watching if this trend continues into 2026, and whether it will be coupled with structural revenue growth or fiscal sustainability,” she said.