Mr DIY Group (MRDIY), 99 Speed Mart (99SMART), Guan Chong (GUAN), Farm Fresh (FFB), Focus Point (FOCUSP): Still Resilient Despite More Challenges Ahead
Neutral (Maintained)
- Top Picks: Mr DIY Group (MRDIY), 99 Speed Mart (99SMART), Guan Chong (GUAN), Farm Fresh (FFB) and Focus Point (FOCUSP). The sector provides a defensive shelter amidst the uncertain global macroeconomic outlook thanks to the domestic-centric earnings base and resilient consumption on stable employment and continuous fiscal support. That said, the prospects of subdued consumer sentiment and rising opex will cap earnings growth, therefore we strategically advocate for the liquid large-cap retailers with better earnings visibility backed by superior operational scale and efficiency. Still NEUTRAL.
- Cautious outlook ahead. Growth numbers could moderate in 2Q25, particularly for the retailers following a solid start in 1Q25 that was aided by the earlier Aidil Fitri timing. Looking beyond the immediate term, we foresee consumer sentiment staying soft, impacted by elevated inflationary pressures as well as uncertain economic and income outlook stemming from global trade tensions. As such, inflation-weary consumers will continue to spend selectively, prioritising essential purchases and bargain-hunt for value hence capping discretionary spending. Meanwhile, all eyes will be on the imminent implementation of petrol subsidy rationalisation later this year to gauge if the actual impact on consumer spending will be restricted.
- Retailers bracing for more challenges. Amidst the rising operating cost environment (sales & service tax (SST) expansion, electricity tariff revision, EPF contributions for foreign workers), we doubt the companies will be able to fully pass on the additional costs considering the demand elasticity and anti-profiteering regulation in place. Hence, margin trends could turn subdued, particularly for retailers (AEON, Padini, Mynews, FOCUSP) unless there are significant efficiency gains to offset the impact. On the other hand, things are turning more favourable for food manufacturers (Nestle, FFB, Power Root) as easing commodity prices (Figures 4-11) and strengthening of the MYR should translate to a more promising margin outlook ahead.
- Top Picks. We prefer defensive and liquid large-cap names – MRDIY and 99SMART – for their entrenched position to capture consumer spending and reasonable valuations vs consumer staple peers. We believe they can better mitigate opex inflation owing to their dominant market share, massive scale of operations and established brand equity. We like FFB for its ambitious drive to penetrate more segments in the dairy industry. We favour GUAN for its stellar earnings outlook supported by forward sales at elevated combined ratios and normalised production volumes. We also highlight FOCUSP’s undemanding valuation notwithstanding the robust optical sales momentum on the back of rising myopic population and proactive marketing drive.
- Risks to our recommendation include a major slowdown in economic growth and a sharp surge of commodity prices.
Stocks Covered: 14
Rating (Buy/Neutral/Sell): 10 / 4 / 0
Last 12m Earnings Revision Trend: Neutral
Top Picks
Mr DIY Group (MRDIY MK) – BUY MYR1.87
99 Speed Mart Retail Holdings (99SMART MK) – BUY MYR2.45
Farm Fresh (FFB MK) – BUY MYR2.08
Focus Point (FOCUSP MK) – BUY MYR1.05
Guan Chong (GUAN MK) – BUY MYR2.99
Analysts
Soong Wei Siang
+603 2302 8130
soong.wei.siang@rhbgroup.com
Tai Yu Jie
+603 2302 8132
tai.yu.jie@rhbgroup.com
A line chart showing MIER Consumer Sentiment Index on the left Y-axis (Index from 50 to 150) and Private Consumption Expenditure (%YoY) on the right Y-axis (from -25% to 25%). The X-axis shows years from 2016 to 2024. The sentiment index shows a significant dip in 2020 and a recovery afterwards, while private consumption expenditure also dipped sharply in 2020 and rebounded strongly.
Company Summary
| Company Name | Rating | Target (MYR) | % Upside (Downside) | P/E (x) Dec-26F | P/B (x) Dec-26F | ROAE (%) Dec-26F | Yield (%) Dec-26F |
|---|---|---|---|---|---|---|---|
| 99 Speed Mart Retail Holdings | Buy | 2.45 | 10.0 | 29.5 | 9.6 | 34.3 | 2.4 |
| AEON CO M | Buy | 1.75 | 29.3 | 10.6 | 0.9 | 8.7 | 4.7 |
| Carlsberg Brewery | Buy | 22.50 | 22.4 | 14.4 | 19.6 | 136.8 | 6.9 |
| DXN Holdings | Buy | 0.88 | 74.9 | 5.4 | 1.5 | 29.9 | 9.2 |
| Farm Fresh | Buy | 2.08 | 16.4 | 23.4 | 3.9 | 17.7 | 1.7 |
| Focus Point | Buy | 1.05 | 43.7 | 7.9 | 1.9 | 25.8 | 6.3 |
| Guan Chong | Buy | 2.99 | 157.9 | 5.8 | 1.0 | 19.2 | 4.3 |
| Heineken Malaysia | Buy | 31.30 | 29.9 | 14.1 | 13.3 | 94.3 | 7.0 |
| Leong Hup International | Buy | 0.98 | 63.2 | 6.1 | 0.7 | 12.7 | 4.9 |
| Mr DIY Group | Buy | 1.87 | 15.3 | 20.9 | 6.6 | 32.7 | 3.6 |
| Mynews | Buy | 0.80 | 43.8 | 14.9 | 1.5 | 10.3 | 2.0 |
| Nestle (M) | Neutral | 77.00 | 1.7 | 29.0 | 31.8 | 110.3 | 3.4 |
| Padini | Neutral | 2.25 | 14.7 | 10.5 | 1.4 | 14.2 | 4.3 |
| Power Root | Neutral | 1.30 | (2.4) | 13.2 | 1.8 | 13.9 | 6.3 |
| QL Resources | Neutral | 4.40 | (1.4) | 32.6 | 4.4 | 14.2 | 1.2 |
Source: Company data, RHB
Chart showing employed persons and unemployment rate from 2010 to 2025. Employed persons show a steady increase, while unemployment rate spiked in 2020-2021 before returning to pre-pandemic levels.
Bar chart showing YoY growth for Malaysia Retail Industry and Private Consumption from 2014 to 2023. Both show high volatility, with a sharp drop in 2020 and a strong rebound in 2021-2022.
Figure 3: Consumer stocks’ valuations
| FYE | Price (MYR/s) | Target (MYR/s) | Mkt Cap (MYRm) | P/E (x) | EPS Growth (%) | P/BV (x) 2 Yr Fwd | P/CF (x) 2 Yr Fwd | ROE (%) 2 Yr Fwd | DY (%) 2 Yr Fwd | Rec | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 Yr Fwd | 2 Yr Fwd | 1 Yr Fwd | 2 Yr Fwd | ||||||||||
| Consumer Discretionary | |||||||||||||
| Mr DIY Group | Dec | 1.62 | 1.87 | 15,344 | 23.2 | 20.9 | 13.6 | 10.7 | 7.1 | 14.8 | 32.0 | 3.2 | Buy |
| Aeon Co (M) | Dec | 1.36 | 1.75 | 1,909 | 11.2 | 10.7 | 5.9 | 4.7 | 0.9 | 2.6 | 8.6 | 4.5 | Buy |
| Mynews Holdings | Oct | 0.56 | 0.80 | 420 | 21.5 | 15.6 | 50.7 | 38.3 | 1.6 | 3.4 | 7.8 | 1.4 | Buy |
| Focus Point | Dec | 0.73 | 1.05 | 337 | 9.0 | 7.9 | 12.7 | 13.3 | 2.2 | 3.8 | 25.9 | 5.6 | Buy |
| Padini | Jun | 1.98 | 2.25 | 1,954 | 10.9 | 10.3 | 5.7 | 5.6 | 1.6 | 5.4 | 14.7 | 3.9 | Neutral |
| Mkt. Cap Weighted Avg. | 20.5 | 18.6 | 12.9 | 10.3 | |||||||||
| Simple Avg. | 15.1 | 13.1 | 17.7 | 14.5 | |||||||||
| Consumer Staples | |||||||||||||
| 99 Speed Mart | Dec | 2.22 | 2.45 | 18,648 | 31.8 | 29.4 | 13.3 | 8.2 | 10.6 | 21.5 | 35.1 | 2.2 | Buy |
| Heineken Malaysia | Dec | 24.04 | 31.30 | 7,262 | 14.8 | 14.1 | 5.2 | 5.0 | 13.3 | 12.9 | 90.2 | 6.7 | Buy |
| Carlsberg Brewery | Dec | 18.30 | 22.50 | 5,595 | 15.0 | 14.4 | 7.1 | 4.1 | 19.8 | 14.6 | 133.2 | 6.6 | Buy |
| Guan Chong | Dec | 1.12 | 3.00 | 3,069 | 1.9 | 2.4 | 51.1 | (20.4) | 0.5 | 1.2 | 28.9 | 13.1 | Buy |
| Farm Fresh^ | Mar | 1.77 | 2.08 | 3,322 | 26.3 | 22.3 | 16.7 | 18.1 | 4.2 | 17.6 | 16.9 | 1.3 | Buy |
| DXN Holdings^ | Feb | 0.51 | 0.88 | 2,511 | 6.3 | 5.3 | 21.5 | 19.3 | 1.7 | 6.2 | 29.2 | 7.9 | Buy |
| Leong Hup International | Dec | 0.60 | 0.98 | 2,158 | 5.8 | 6.1 | (15.8) | (4.3) | 0.8 | 3.9 | 14.6 | 5.1 | Buy |
| Nestle (M) | Dec | 75.60 | 77.00 | 17,728 | 33.8 | 28.9 | 16.1 | 16.9 | 32.1 | 21.2 | 95.3 | 2.9 | Neutral |
| QL Resources^ | Mar | 4.50 | 4.40 | 16,424 | 36.1 | 34.3 | 7.2 | 5.2 | 4.8 | 20.8 | 14.5 | 1.2 | Neutral |
| Power Root^ | Mar | 1.31 | 1.30 | 555 | 14.1 | 12.7 | 23.6 | 10.5 | 1.8 | 10.6 | 13.2 | 5.3 | Neutral |
| Mkt. Cap Weighted Avg. | 27.2 | 24.9 | 12.6 | 8.3 | |||||||||
| Simple Avg. | 18.6 | 17.0 | 14.6 | 6.3 | |||||||||
Note: ^FY25F-26F valuations refer to those of FY26F-27F. Source: RHB
Commodity Price Trends
Line chart of USD/MT from July 2020 to July 2024. Price peaked around mid-2022 and has since moderated but remains volatile.
Line chart of USD/BU from July 2023 to Jan 2025. Price shows a general downward trend over the period.
Line chart of MYR/MT from July 2020 to July 2024. Price saw a massive spike in late 2021 to mid-2022 and has since fallen but remains above 2020 levels.
Line chart of USD cents/LB from July 2020 to July 2024. Price trended upwards, peaking in late 2023, and has slightly eased since.
Line chart of USD/MT from June 2023 to June 2025. Shows a dramatic and unprecedented price surge starting in late 2023 and peaking in early 2024.
Line chart of USD/Lbs from May 2023 to May 2025. Price shows a general upward trend with a notable peak in early 2025.
Line chart of USD/BU from Feb 2023 to May 2025. Shows a consistent and significant downward trend over the period.
Line chart of USD/MT from Feb 2023 to May 2025. Shows a general downward trend after a peak in late 2023.
Disclosures and Disclaimers
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
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| Analyst | Company |
|---|---|
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