PETALING JAYA: Select consumer stocks can leverage on investor interest as the economy digests a range of signals from rising costs to consumer spending in a continuously shifting landscape brought about by the West Asian conflict and closure of trade routes.
MBSB Research, which has maintained a “positive” recommendation on consumer stocks, said its top picks remain poultry firm Leong Hup International Bhd
, home improvement retailer MR DIY Group (M) Bhd and convenience store operator 99 Speed Mart Retail Holdings Bhd.
It has “buy” calls on all three stocks, with Leong Hup at a target price (TP) of RM1.07 for defensive exposure to staple protein demand, MR DIY at RM2.13 for its resilient value-driven retail model and 99 Speed Mart at RM4.37 benefiting from increased downtrading behaviour given its strong mass-market positioning.
The research house said resilient domestic consumption, supported by stable employment conditions, manageable inflation going into 2026, and continued fiscal assistance, which should sustain spending across mass-market and essential segments underpin the outlook for consumer stocks.
“While geopolitical tensions have introduced a layer of uncertainty, the domestic consumption story remains intact for now, particularly for staples where demand should remain resilient.
“Tourism flows from Visit Malaysia 2026 marketing campaigns should also provide incremental support to retail, fast moving consumer goods and foodservice activity,” it said.
However, it noted that there were downside risks from the West Asian conflict prolonging, as sustained elevation in oil prices could drive a broader cost inflation cycle through higher freight, packaging (petrochemicals), fertiliser-linked agriculture and imported inputs.
It pointed out that rising cost would lead to gradual margin compression across consumer stocks as inventory cycles roll over, with consumer discretionary stocks bearing the brunt given weaker pricing power, softer demand from eroding household purchasing power and a reduction of tourist inflows.
“In such an environment, we see relative resilience in staples and value-driven retailers, supported by defensive demand and downtrading behaviour,” it said, adding that in March, commodity trends showed a divergent pattern, with some input costs rising on both a year-on-year and month-on-month basis.
Rising crude palm oil (CPO) prices could raise palm-based input costs for producers such as Hup Seng Industries Bhd, a biscuit maker, in which MBSB Research has a “buy” call with a TP of RM1.09.
Mineral water purveyors Life Water Bhd (“buy” call and TP of RM1.34) and Spritzer Bhd (“neutral” call and RM2.45) may see margin headwinds from rising PET resin costs driving up packaging costs.
“Overall, while softness in cocoa, sugar and coffee continues to support cost conditions, rising CPO and PET resin prices introduce pockets of upward pressure,” it said.
