KUALA LUMPUR (Oct 1): Rising labour costs, potential expansion of sin taxes and subsidies tightening are expected to weigh on the consumer sector, said Apex Securities.

Government aid is set to rise further under Budget 2027, though higher costs of living and softer consumer sentiment could limit the benefit to households and spending, the research house said. Rising operating expenses, meanwhile, could also pressure margins, the house noted.

“Consumers are likely to remain value-conscious,” favouring essentials and affordable food-and-beverage over higher-ticket discretionary purchases, Apex Securities said.

Prime Minister Datuk Seri Anwar Ibrahim is set to present Budget 2027 on Oct 9. He has said minimum wage is due for an increase and he will present details during the budget presentation in Parliament.

Anwar is also widely expected to maintain targeted cash assistance programmes to cushion the rising cost of living.

Apex Securities, however, flagged risks of higher excise duty for cigarettes and an expansion in taxes on sugar to cover more products.

The government could further rationalise existing fuel subsidy schemes by tightening eligibility or allocation, the house said, noting that businesses that rely on transportation, distribution and delivery could also face higher expenses from an increase in fuel cost.

“Overall, we expect moderate consumption growth over the next six months, with earnings recovery likely to remain uneven across the sector,” the house concluded.

For strategy, Apex Securities kept its 'neutral' rating on the Malaysian consumer sector.

The research house highlighted poultry firm CCK Consolidated Holdings Bhd (KL:CCK), restaurant operator Oriental Kopi Holdings Bhd (KL:KOPI) and apparel retailer Padini Holdings Bhd (KL:PADINI) for their relatively clearer exposure to household consumption.

CCK offers shelter with its essential food products while Oriental Kopi provides exposure to resilient out-of-home-food demand and Padini offers greater sensitivity to discretionary household spending, the house said.

Livestream commerce firm Oasis Home Holding Bhd (KL:OHM) offers a more indirect exposure to Budget 2027, with potential benefits from stronger household disposable income and discretionary spending, Apex Securities added.