KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Sector Outlook: OVERWEIGHT
Hong Leong Investment Bank (HLIB) maintains an OVERWEIGHT rating on Malaysia’s consumer sector, citing supportive macroeconomic fundamentals and easing cost pressures that are expected to drive earnings recovery in 2H25, despite the expanded Sales and Service Tax (SST).
Key Calls and Target Prices
| Stock | Call | Target Price (RM) |
|---|---|---|
| 99SMART (5326) | BUY | 2.98 |
| AEON (6599) | BUY | 1.82 |
| FOCUSP (0157) | BUY | 1.10 |
| NESTLE (4707) | HOLD | 78.00 |
| ORIENT (4006) | HOLD | 0.76 |
| BJFOOD (5196) | SELL | 0.21 |
| PWROOT (7237) | SELL | 10.77 |
Why the Optimism?
1. Cost Relief on Commodities
Prices for sugar, wheat, coffee, and palm oil have stabilized or declined.
Companies like Nestle and Mr DIY have already recorded margin improvements from lower input and inventory costs.
The strengthening Ringgit (target RM4.10/USD by year-end) enhances import efficiency, especially for retailers.
2. Labour Market & Fiscal Support
Unemployment remains low at 3.0% (as of April).
EPF Account 3, cash transfers, and wage growth continue to prop up B40 and M40 household spending.
Retail sales grew 4.7% YoY in April, hitting RM67.3 billion.
3. SST Expansion Impact Limited
8% SST now applies to rentals/leasing above RM1m turnover, but impact on mall-based retailers expected to be mild.
Many retailers already raised prices due to the minimum wage hike, cushioning SST effects.
Key staples remain SST-exempt, preserving consumer demand.
Catalysts Ahead
Budget 2026 (October) may bring further consumer-focused stimulus and clarity on subsidies.
Festive seasons and holidays are expected to sustain strong sales in Q4.
Tourism boom: 13.4 million tourist arrivals in Jan–Apr 2025 (+21% YoY) will benefit retail and F&B, boosting foot traffic and sales for players like FocusPoint and Oriental Holdings.
Valuation Disconnect = Opportunity
Despite the strong fundamentals and earnings recovery trends, the consumer sector trades at just 18.7x forward P/E, below its 5-year average — presenting a compelling value play for long-term investors, especially in quality names with earnings visibility.
Investor Takeaway
Malaysia’s consumer sector continues to defy headwinds from tax reforms and global uncertainty, supported by macro stability, easing input costs, fiscal buffers, and sector-specific tailwinds.
Stocks like 99SMART, AEON, and FOCUSP stand out as high-conviction BUYs backed by robust fundamentals.
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