CIMB Research expects consumer spending to be front-loaded in the first half of financial year 2026.
PETALING JAYA: Consumer staples-based companies led the recent third-quarter results of financial year 2025 (3Q25), mostly recording top-line growth, says CIMB Research.
With the exception of Fraser & Neave Holdings Bhd
(F&N) and QL Resources Bhd, the research house said all consumer staples companies under its coverage recorded year-on-year (y-o-y) top-line growth, supported by government cash aid (99 Speed Mart Retail Holdings Bhd and Nestlé (M) Bhd) and new product launches (Farm Fresh Bhd).
“This translated into stronger bottom lines, driven by improved operating leverage and a more profitable sales mix.”
Meanwhile, all consumer staples companies posted stronger y-o-y profitability except for QL, which was weighed down by revenue decline and lower operating leverage. Among 14 consumer stocks under its coverage, CIMB Research noted that 99 Speedmart and Farm Fresh beat expectations in 3Q25.
99 Speedmart has benefitted from top-line growth from the government assistance programmes, while Farm Fresh new product launches lifted sales and operating leverage.
“We expect consumer spending to be front-loaded in the first half of financial year 2026, supported by festive-driven demand as most major celebrations fall in the first half of the year, further amplified by the second one-off RM100 Sumbangan Asas Rahmah (Sara) cash handout to all Malaysian adults in February 2026.”
While this will lift sales of essential goods, retailers, particularly those operating in mall-based environments, will continue to face margin pressure from rising input and labour costs and the implementation of the 8% sales and service tax on leasing services.
To mitigate these pressures, CIMB Research expect operators to focus on cost efficiencies, tighter operational controls, and selective price pass-throughs, with a stronger ringgit/yuan offering some relief for import-dependent retailers.
More retailers are positioning to capture Sara-driven spending. Its top “buy” picks include 99 Speedmart with a target price (TP) of RM3.65, Farm Fresh at a TP of RM2.25 and Padini Holdings Bhd with a TP of RM2.40.
