KUALA LUMPUR: The consumer sector is expected to post a mixed performance in the second half of 2025 (2H25), with spending skewed towards essentials as discretionary retailers face rising costs and new tax measures, CIMB Securities Sdn Bhd said.
Of the 14 consumer companies under its coverage in the second quarter, seven met expectations, two beat forecasts and five fell short, weighed by weaker sentiment, the absence of festive-driven sales and higher operating costs.
CIMB Securities maintained a “Neutral” stance on the sector and named 99 Speed Mart Retail Holdings Bhd, Farm Fresh Bhd and Padini Holdings Bhd as its top picks, citing defensive positioning and resilience in capturing market share during softer consumer spending.
The research house maintained its “Buy” calls on the stocks, with target prices of RM2.80, RM2.40 and RM2.40, respectively.
“We expect a more subdued performance in 2H25 given the absence of major festivities, weaker consumer sentiment amid global uncertainties, inflationary pressures and subsidy rationalisation plans.
“Spending is likely to skew further toward essentials, putting pressure on discretionary retailers,” it said in a note.
CIMB Securities expects revenue growth to continue in 2H25, supported by store expansions and outlet reopenings across players such as 99 Speedmart and Mynews Holdings Bhd.
Nestle (M) Bhd is projected to gradually recover from boycott-related headwinds, while Farm Fresh is poised to gain from new product launches, higher production capacity and stronger export sales.
Margins, however, are expected to remain under pressure from higher input and labour costs, alongside the eight per cent Sales and Service Tax on leasing services, which will hit mall-based retailers.
CIMB Securities said essential spending is likely to be driven by government’s RM13 billion allocation for 5.4 million low-income households and a one-off RM100 Sumbangan Asas Rahmah e-credit for 22 million Malaysians.
The Rahmah Madani Sales allocation has also been doubled to RM600 million.
The firm said these measures should help cushion rising living costs and support demand for necessities, but overall consumer spending will remain value-driven, favouring defensive and essentials-based retailers.
© New Straits Times Press (M) Bhd
