HLIB Research said the outlook for consumer stocks remained constructive underpinned by supportive macroeconomic conditions and sustained spending in tourism-related activity.
PETALING JAYA: The consumer sector will continue to be driven by private consumption in the first half of 2026 (1H26), fuelled by a resilient labour market, tourism, targeted fiscal aid and the second phase of the civil service salary adjustments.
Hong Leong Investment Bank (HLIB) Research said the outlook for consumer stocks remained constructive underpinned by supportive macroeconomic conditions and sustained spending in tourism-related activity.
Based on government statistics, retail trade momentum remained healthy with October 2025 sales rising 6.8% year-on-year to RM69.3bil.
“This positive performance reflects steady demand conditions and continued strength across both wholesale and retail segments.
“While cost pressures and cautious discretionary behaviour persist, multiple demand side catalysts are expected to sustain consumption growth, particularly across essential goods, mass market retail, and consumer services,” it said.
The upcoming Chinese lunar new year and Aidil Fitri celebrations in February and March respectively would also provide a meaningful lift to consumer stocks’ first quarter performance as these festivities support near-term retail and food and beverage activities.
The research house has reiterated an “overweight” stance on consumer stocks, with top picks being Aeon Co
(M) Bhd and Focus Point Holdings Bhd, both with “buy” calls and target price (TP) of RM1.72 and 83 sen respectively supported by their earnings visibility.
It noted that stock valuation provides a compelling entry point as despite positive macroeconomic and sectoral tailwinds, consumer stocks remained undervalued, trading at 19.6 times forward price-to-earnings (PE).
“This valuation disconnect presents an attractive entry point for long-term investors, particularly for quality names with earnings visibility, solid execution, and balance sheet resilience,” it said.
The research house has a “hold” call on Nestle (M) Bhd given limited upside but has increased the TP to RM131 from RM98.
It expected better fourth quarter ended Dec 31, 2025 (4Q25) sales following a strong 3Q25 with the easing of boycott pressures.
It has revised its call on 99 Speed Mart Retail Holdings Bhd to a “hold” from “buy” with an unchanged TP of RM3.80 following a 13.2% appreciation in the share price over the past month.
“At current levels, the stock is trading at 46.5 times FY26 PE, which we view as fairly valued and largely reflective of its earnings growth prospects in the near term,” it added.
HLIB Research also expected Oriental Kopi Holdings Bhd, in which it has a “hold” call and TP of RM1.22, to benefit from tourism under Visit Malaysia 2026 (VM26) given its diverse menu offerings featuring Malaysian cuisine as well as packaged goods commonly purchased by tourists as souvenirs.
The VM26 campaign would be a key structural driver for consumer stocks as the government has targeted 47 million inbound tourists and RM147bil in tourism receipts.
