PETALING JAYA: The consumer sector is expected to remain on steady footing, underpinned by resilient spending on essentials and supportive policy measures.
Growth prospects are likely to be driven by staples and value-focused retail segments, while discretionary spending may face intermittent softness amid shifting economic conditions. Early signs also pointed to a softer start to the year, particularly outside festive periods.
BIMB Research maintained its “overweight” rating on the consumer sector, mainly driven by the strong outlook on consumer staples and value-for-money retailers. This is supported by anticipated resilient domestic consumption of basic necessities, continued government financial assistance, and the expected higher tourist arrivals in 2026.
“Nevertheless, we remain cautious on the implementation risks associated with RON95 subsidy rationalisation, the broader sale and services tax expansion as well as geopolitical tensions such as the ongoing Iran conflict, which could lead to higher global oil prices, rising logistics and raw material costs which will weigh on consumer purchasing power and sentiment,” BIMB Research said.
Earnings performance in 2025 provided a strong base. The companies under its coverage delivered a weighted average net profit growth of 32.3% year-on-year, supported by firm domestic demand.
At the macro level, retail trade sales expanded 6.1% while the consumer confidence index rose 9% as at December 2025. Staples outperformed with earnings growth of 39.7%, compared with 21.2% for discretionary players. That said, cracks have begun to emerge in non-essential spending.
Data from Retail Group Malaysia showed a slight 0.39% contraction in third-quarter 2025 retail sales, reflecting softer discretionary demand. The group projected 4% growth in 2026, supported by higher cash aid under Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah, civil servant salary increments and stable fuel prices.
Additional support will come from Visit Malaysia Year 2026 tourist arrivals, alongside festive spending during the Chinese New Year and Hari Raya Aidilfitri.
The research house continued to favour defensive and value-driven names.
BIMB Research has “buy” calls on MR DIY Group (M) Bhd
, with a target price of RM2.40, and Aeon Co (M) Bhd, with a target price of RM1.70, citing their strong positioning. Conversely, it is negative on premium discretionary counters including Amway (M) Holdings Bhd which carries a “sell” call and a target price of RM4.40.
