KUALA LUMPUR (Jan 10): Maybank Investment Bank Bhd (Maybank IB) believes the Malaysian consumer sector is poised for a strong year in 2025, driven by robust macroeconomic factors and government assistance that are expected to boost disposable income, improving consumer sentiment and spending capacity.

Maybank IB has projected a net profit growth of 15% year-on-year (y-o-y) for the basket of consumer stocks under its coverage (2024 estimate: minus 3%), with Nestle Malaysia, Farm Fresh and MR DIY expected to see “positive earnings shifts.”

“Key government-related initiatives include the Employees Provident Fund Account 3 withdrawals, civil service salary increase (between 7% and 15%, effective Dec 1 2024), and a minimum wage hike to RM1,700 per month (from RM1,500 per month, effective Feb 1, 2025),” it said.

The investment bank views food and beverage (F&B) manufacturers and retailers to benefit the most from positive changes in consumption patterns. “Other retailers who are well positioned within the B40 and M40 target market with affordable and value-priced items like MR DIY, Padini and AEON should also experience a boost in sales volume,” it said.

Based on historical trends, it observed that annual retail sales growth showed positive growth y-o-y in the years that minimum wage hikes were implemented (2013: 7.2%) and 2016 (7.1%), except 2020 (minus 6.1%) due to the Covid-19 pandemic.

“There was an even larger growth in the year after the minimum wage increase in 2014 (9.9%) and 2017 (9.5%), excluding 2023 (6.1%) given the high base in 2022 (19.2%) from strong pent-up demand spending post-pandemic,” it said.

The bank also took a look at the overdue rates for credit card debt in Malaysia and found that the credit card repayment rates have remained healthy despite the strain on household budgets and higher cost of living in recent years.

“Since January 2013, the average credit extended per card was an average of RM15,269. This represented 25% of the total credit extended per card. The average rate of overdue payments has also stayed at a low of 0.9% from 2013 to 2024. With relatively low short-term debt and good repayment rates, we believe that higher consumer spending in F&B and retail will be unimpeded by an existing burden to repay debt,” it added.

Uploaded by Lam Seng Fatt