This article first appeared in Capital, The Edge Malaysia Weekly on January 12, 2026 - January 18, 2026

MALAYSIA’s consumer sector has come under the limelight as a stronger ringgit, easing cost pressures and government fiscal support measures reshape earnings prospects across the retail landscape.

While consumer sentiment remains cautious amid subsidy rationalisation and policy uncertainty, companies with scale, pricing power and efficient supply chains are increasingly differentiated from the rest.

Against this backdrop, investors are reassessing whether recent share price gains in consumer stocks are sustainable — or whether valuations have already priced in much of the upside.

We examine three household names — 99 Speed Mart Retail Holdings Bhd (KL:99SMART), Eco-Shop Marketing Bhd (KL:ECOSHOP) and Mr DIY Group (M) Bhd (KL:MRDIY) — to gauge where upside potential may lie.

Notably, the strengthening ringgit has had a positive impact on Eco-Shop and Mr DIY by lowering operating and procurement costs.

Among big-cap consumer stocks, 99 Speed Mart was the best performer in 2025, gaining nearly 60%. After such a robust performance last year, what’s next for the market darling?

Valuations are clearly stretched. The stock is trading at a trailing 12-month price-earnings ratio (PER) of 55.4 times and a forward 12-month PER of 51 times. It closed at RM3.94 last Wednesday, well above the consensus target price of RM3.66, with Affin Hwang Investment Bank the most bullish at RM4.80.

Whether further target price upgrades emerge is likely to depend on the stock’s ability to sustain its current elevated price levels.

Consensus estimates project a net profit of RM633.2 million in FY2025 and RM742.5 million in FY2026. To justify the RM4.80 target price under a PER assumption of 55.4 times, 99 Speed Mart would need to deliver a net profit of about RM730 million in the coming year, which is within consensus expectations.

Having said that, investor tolerance for persistently high valuations will be tested. Current multiples are at peak levels since its September 2024 listing and significantly higher than the Bursa Malaysia Consumer Index PER of about 20 times.

On the positive side, 99 Speed Mart stands to benefit from the government’s Sumbangan Asas Rahmah (Sara) initiative, which is expected to attract a new wave of customers and broaden its consumer base. The group offers more than 3,000 stock-keeping units across 50 product categories.

“We view 99 Speed Mart as the prime beneficiary of Sara, which is the government’s preferred fiscal support programme. Outlet expansion to penetrate underserved regions will continue to anchor its steady three-year earnings growth of 15%,” RHB Research said in a Nov 18 note, adding that the normalisation of sentiment towards Nestlé brands should also support volume growth.

The group recorded positive same-store sales growth (SSSG) of 1.4% in FY2024, with average basket size declining to RM21.44 from RM22.30 in FY2023. While SSSG data for 9MFY2025 is not immediately available, the group expanded strongly, by 11.9%, in 3QFY2025.

For 9MFY2025, its net profit margin improved to a healthy 5.5%, up from 4.9% in FY2024, while the average basket size remained stable at RM21.40.

The group’s outlet expansion will continue to focus on greenfield openings in new townships, the east coast of Peninsular Malaysia and East Malaysia. It remains to be seen whether the group will pursue more aggressive overseas expansion, following the opening of its maiden outlet in Fuzhou, Fujian province, China. The target is to open 250 new outlets annually.

As at end-September 2025, 99 Speed Mart was in a net cash position of RM1.07 billion or 12.7 sen per share, with zero borrowings.

Founded in 2003, newly listed Eco-Shop operates a nationwide network of more than 370 stores, offering a wide range of products priced at RM2.60 in Peninsular Malaysia and RM2.80 in East Malaysia.

Its listing was backed by private equity firm Creador, with support from 10 cornerstone investors. In the financial year ended May 31, 2025 (FY2025), Eco-Shop recorded a strong 21.67% increase in footfall.

The dollar-store chain is expected to deliver net profits of RM258 million in FY2026 and RM315.6 million in FY2027, after registering RM214.42 million in FY2025.

Against its IPO price of RM1.13, the stock has gained 26.5% to close at RM1.43 last Wednesday, making it one of the best-performing new listings of 2025. The stock is now within striking range of analysts’ consensus target price of RM1.61, currently trading at a forward 12-month PER of 33 times.

Assuming valuations remain unchanged, Eco-Shop would need to post at least RM280 million in net profit in FY2026 to justify the target price.

In 1QFY2026, the group reported a net profit of RM58.76 million, a 48.4% year-on-year jump from RM39.6 million. Net profit margin rose to 8.6%, well above FY2025’s 7.7% and FY2024’s 7.6%, supported by higher selling prices, a more favourable product mix and the stronger ringgit in global procurement.

While management acknowledges a long growth runway as consumers increasingly seek value-for-money essentials, Eco-Shop is placing greater emphasis on expanding its in-house product range to deliver better quality at attractive prices.

“While we foresee the burgeoning dollar store industry to provide a long expansion runway for Eco-Shop to offer robust and sustainable earnings growth, the valuation looks fair at this juncture. We believe a strong sign of SSSG recovery will be key for sentiment on the stock to turn bullish,” RHB Research said in an Oct 27 note.

In 1QFY2026, SSSG contracted by 12.7%, owing to weak consumer sentiment and the impact of price adjustments. Management has indicated that SSSG improved in 2QFY2026 and is expected to return to positive territory by 4QFY2026 as supply chain disruptions have largely been resolved.

As at end-August 2025, borrowings stood at RM72 million, against RM32.13 million in cash.

With more than two decades of operations, Mr DIY remains a strong household name. Based on the consensus target price of RM1.96, the stock offers an upside of 25.6% from last Wednesday’s closing price of RM1.56.

Compared to 99 Speed Mart and Eco-Shop, Mr DIY trades at a lower trailing 12-month PER of 23.4 times and a forward 12-month PER of 22.7 times, according to Bloomberg.

To sustain its current valuation, however, Mr DIY would need to achieve an annual net profit of at least RM750 million in FY2026, above the consensus estimate of RM698.75 million. Earnings are expected to rise further to RM764.43 million in FY2027.

For FY2025, net profit is projected at RM635.25 million, after posting RM468.85 million in 9MFY2025. Net earnings stood at RM568.94 million in FY2024.

At its peak in April 2021, Mr DIY traded at a historical high PER of 60.5 times before Creador exited as a substantial shareholder. Since hitting a high of RM2.79 (adjusted post-bonus issue) that month, the share price has declined more than 40%.

A key concern has been declining average basket size, a proxy for consumer spending. This fell to RM25.30 in FY2024 from RM26.30 in FY2023 and RM27.80 in FY2022. SSSG declined by 1.9% in FY2024, an improvement from the 3.7% contraction in FY2023.

In 9MFY2025, the average basket value declined 1.7% amid weak sentiment linked to subsidy rationalisation and policy uncertainty over RON95 petrol. SSSG fell 3% in 1HFY2025, followed by a 2.8% decline in 3QFY2025.

In a Nov 12 note, Kenanga Research expects year-on-year improvement in 4QFY2025 as warehouse integration issues have been resolved and operations are running near full utilisation.

The group added 26 new stores in 3QFY2025, bringing its total to 1,528 across Malaysia and Brunei as at end-September 2025. It aims to expand to 2,000 stores, including KKV and other sub-brands targeting Gen Z and the M40 segment, within three years.

A stronger ringgit should support margins, given that over 65% of the cost of goods sold relates to goods sourced from China. Gross margins are further aided by a five-month inventory lag.

“Mr DIY could leverage the margin advantage by launching more aggressive price promotions and marketing campaigns to entice spending. In addition, consumer-friendly fiscal policy, including cash handouts and the inclusive petrol subsidy rationalisation approach, should help stimulate consumer sentiment and spending, thereby translating into higher volumes,” RHB said in a Nov 11 note.

Average inventory per store declined to RM754,000 in FY2024, from RM860,000 in FY2023, reflecting the growing number of smaller-format stores. Inventory turnover days improved to 157 days, from 167 days in FY2023, though still elevated by design to mitigate supply chain risks.

Over the past five years, Mr DIY has consistently maintained double-digit net profit margins above 12%. As at end-September 2025, it had borrowings of RM148.75 million against cash of RM150.15 million, resulting in a marginal net cash position. A dividend yield of about 4% provides additional support for the stock. 

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