Retailers get a lift from Sara

THE relatively strong run in the consumer retail sector seen in recent months appear to show no signs of exhaustion just yet.

The rise appears to be fuelled in part by improved consumer sentiment, in tandem with a slight recovery in the ringgit, which could help boost purchasing power.

Any continued appreciation of the local currency may lead to potential bottom-line gains from cheaper imported products sold by retailers, provided other input costs remain under control.

In addition, consumer sentiment has improved in recent months, mainly supported by the Sumbangan Asas Rahmah (Sara) RM100 assistance programme for citizens.

Phase one of the aid programme began on Aug 31 and ended on Dec 31, 2025.

The programme has since moved into its second phase from Jan 9, 2026, just ahead of the upcoming Chinese New Year and Ramadan fasting month.

These festivities usually help boost overall consumer sentiment during periods of relatively favourable economic conditions.

Meanwhile, data from the Malaysia Retail Industry Report show that consumer spending recorded a better-than-expected improvement in the third quarter of 2025 (3Q25), with retail sales growing 4.9% year-on-year (y-o-y), beating an earlier September poll forecast of 2.6%.

Analysts project that spending likely received a further boost in the 4Q25 amid increased year-end festivities and back-to-school spending.

Among the factors driving higher-than-expected retail growth in the 3Q25 are the reduction in the overnight policy rate (or borrowing costs), the new electricity tariff structure in Peninsular Malaysia – which saw slightly lowered bills for various households – and the modest reduction in RON95 petrol prices RM2.05 to RM1.99 per litre, the report says.

Another factor that appears to have boosted consumer spending is the RM100 Sara aid, which was effective for only one month in the 3Q25.

This is reflected across retail sub-sectors for the quarter. Mini markets, convenience stores, and cooperatives recorded the strongest growth, up 18.1% y-o-y, followed by fashion and fashion accessories at 10.9% y-o-y, and supermarkets and hypermarkets at 5.1% y-o-y.

Some players in the consumer retail store sector benefitted particularly from this trend, notably 99 Speed Mart Retail Holdings Bhd (99 Speedmart), which is well-positioned to tap into value-driven growth.

99 Speedmart is also the only listed company among the outlets where Sara recipients can spend their RM100, and it continues to attract strong investor interest, recording gains of more than 60% over the full year of 2025.

The company is the largest and most dominant player in the mini-market segment, with a 40.1% market share at the time of its listing in late 2024.

Its share price rose steadily following the announcement of the RM100 Sara aid during Budget 2025 on Oct 18, 2024.

It’s no surprise, then, that 99 Speedmart’s historical price-to-earnings ratio is at an all-time high of 56 times.

While the stock may appear stretched, further gains are possible if the company can continue translating growth into meaningful bottom-line results.

99 Speedmart reported strong net profit growth in its latest 3Q25 ended Sepember 2025, with net profit rising 50% to RM160.65mil, while revenue increased 19% to RM3.04bil.

The company said growth was driven by continued expansion of its outlet network, with a net addition of 269 new stores y-o-y to 2,966 outlets as of Sept 30, 2025 – a 10% increase.

This expansion contributed to a 13.2% y-o-y rise in total transaction volumes to 390.3 million, with an average basket size of RM21.40 for the cumulative nine months ending Sept 30, 2025.

Whether 99 Speedmart has reached the peak of its current growth cycle remains a key question, but analysts remain bullish on its near-term outlook.

CIMB Research notes that 99 Speedmart is a key beneficiary of Sara-driven spending, with more than 2,000 outlets – or around 67% of its current store count – enrolled as eligible retailers for the RM100 aid.

The research house has maintained its “buy” rating on 99 Speedmart and raised its target price from RM2.80 to RM3.65, citing 3Q25 results that exceeded both its own and consensus expectations.

However, the imminent expansion of the Sara aid eligible retailers list may pose potential risks, as 99 Speedmart currently enjoys a first-mover advantage from the initial phase of the programme.

“We expect consumer spending to be front-loaded in the first half of the year, supported by festive-driven demand as most major celebrations fall during this period.

“This will be further amplified by the second RM100 Sara to all adult citizens, lifting sales of essential goods,” CIMB Research says.

Apart from 99 Speedmart, other retailers enrolled for Sara spending include MR DIY Group (M) Bhd with 20 stores, MyNews Holdings Bhd with 30 outlets, and 7-Eleven Malaysia Holdings Bhd, which is currently applying, the research house notes.