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KUALA LUMPUR: The consumer products sector will continue to provide a defensive shelter by offering earnings visibility amid the volatile market conditions.
RHB Research said that this will be supported by the domestic-centric earnings bases and resilient consumption.
"Fundamentally, the rising prominence of the Sumbangan Asas Rahmah initiative as a fiscal support tool should direct more spending to the sector, whilst the inclusive petrol subsidy rationalisation approach has removed a major overhang and cooled down inflationary risks," it said in a note.
Other sector catalysts include the stronger ringgit, wage growth and the Visit Malaysia Year 2026 campaign.
RHB Research said the main beneficiaries of the government's fiscal policy will continue to be favoured by investors, including 99 Speed Mart Retail Holdings Bhd and Nestle (Malaysia) Bhd.
"Meanwhile, Farm Fresh Bhd's robust growth momentum and expansion headroom in regional markets should keep investors excited.
"Other than that, we highlight that a few quality consumer retail players – Eco-Shop Marketing, Mr DIY Group (M) Bhd, AEON Co (M) and Focus Point Holdings Bhd – are trading at more reasonable or undemanding valuations.
"This is compelling, as we believe discretionary spending could pick up in tandem with the improving consumer sentiment ahead," it said.
The firm expects to see a sequential pick-up in sales in the fourth quarter of 2025, while earnings should be driven by favourable year-end seasonal factors.
RHB Research maintained its "Overweight" call on the sector.
