PETALING JAYA: The consumer sector is seen to enter a margin-driven downcycle despite resilient demand fundamentals, with the focus shifting from growth to cost discipline and pricing power.
This has prompted BIMB Research to downgrade its sector call to a “neutral” from “overweight” previously.
The research house said the first quarter of 2026 delivered a mixed earnings season, with seven of the 11 companies under its coverage meeting expectations while four fell short.
While demand for essential goods remained relatively resilient, earnings momentum moderated amid increasingly cautious consumer spending and mounting margin pressures.
The research house noted that MR DIY Group (M) Bhd
and QL Resources Bhd continued to demonstrate resilience through their defensive business models and value- focused offerings.
Nestle (M) Bhd also posted strong earnings growth, although valuation concerns continued to limit upside potential, it said.
At the other end of the spectrum, Kawan Food Bhd, Amway (M) Holdings Bhd and MSM Malaysia Holdings Bhd lagged behind due to weaker earnings momentum, softer demand conditions and persistent margin pressures.
BIMB Research noted that consumer spending patterns are becoming increasingly selective despite stable domestic demand.
Within the research house’s coverage universe, consumer staples earnings declined 4.4% year-on-year, while the consumer discretionary segment recorded a steeper 9.8% contraction.
Nevertheless, BIMB Research believes demand for necessities will remain supported by government initiatives such as the Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah, civil servant salary adjustments, stable fuel prices and tourism-related spending linked to Visit Malaysia Year 2026.
