Kenanga Research upgrades consumer sector to 'overweight'

TheEdge Tue, Oct 04, 2022 08:27am - 1 year View Original


KUALA LUMPUR (Oct 4): Kenanga Research has upgraded the consumer sector to “overweight”, largely underpinned by a bullish view on mid-market retailers as: i) consumers rekindle shopping-in-person; ii) their customer base is skewed towards the M40 group whose spending power is less impacted by the high inflation given a healthy household balance sheet; and iii) they have been able to pass on higher costs and hence maintain their margins.

In a sector update on Tuesday (Oct 4), the research house said that on the other hand, while F&B producers are likely to sustain their sales, this will be achieved at the expense of margins. F&B producers have little room to hike prices as their customer base is skewed towards the B40 group that is harder hit by the high inflation.

“Our sector top picks are AEON Co (M) Bhd (OP; TP: RM1.95) and Padini Holdings Bhd (OP; TP: RM4.10),” it said.

Kenanga said AEON is a good proxy to consumers rekindling shopping-in-person (versus online) which offers the sound-and-sight experience that online shopping is unable to match,

Meanwhile, it said it likes Padini for: i) the strong spending power of its primary target customers, i.e. the M40 group; ii) its strong net cash position enabling it to purchase inventory ahead of price hikes and potential supply disruptions; and iii) innovative all-in-one (men, women and children) Brands Outlet, boosting the chances of garnering footfall from shoppers.

The content is a snapshot from Publisher. Refer to the original content for accurate info. Contact us for any changes.






Related Stocks

AEON 1.090
PADINI 3.430

Comments

Login to comment.