Consumer sector
Maintain neutral: Amid expectations of slower domestic consumption into 2012, we are overall “neutral” on the consumer space. Positively, this sector comprises resilient companies with strong balance sheets and strong cash flows.
Dividend yields are decent and average 4% across the sector for 2012, while capital management remains an ongoing theme. It is for these very reasons, however, that consumer stocks had significantly outperformed the FBM KLCI in 2011, and current valuations are fair, with the sector trading at a 2012 PER of 15.8 times.
Within the consumer sector, there are pockets of interest, retail being one of them.
While 2012 is likely to be a challenging year, our two stocks in this segment, Padini Holdings Bhd and Aeon Co (M) Bhd are likely to outperform their peers, in our view, due to strong management, their responsiveness to customer needs and strong balance sheets.
Padini’s move into Brands Outlets provides it with a whole new clientele base while Aeon’s property management division provides it with stable recurring earnings.
We have a “buy” on QL Resources Bhd for its strong earnings growth ahead, emanating primarily from its Indonesian operations. We are nevertheless “neutral” on MSM Malaysia Holdings Bhd and Beras Nasional Bhd due to price control issues that cloud their near-term outlook.
Tobacco and brewery stocks had significantly outperformed the KLCI in 2011. Capital management is likely to be an ongoing theme that will sustain interest in all four stocks but valuations are fair in our view. The tobacco stocks trade at a 2012 PER of 15.8 times while the brewers trade at 17.5 times. With the recent run-up, we downgrade Carlsberg Brewery (M) Bhd and Guinness Anchor Bhd to “hold” from “buy”.
We have two great companies in this category — Nestle (M) Bhd and Fraser & Neave Holdings Bhd (F&N). Trading at average 2012 PER of 23.1 times with average net yield of just 3.3%, we see little reason to own Nestle at this stage while F&N’s near-term outlook is clouded by potentially stiffer competition from Coca-Cola and Permanis Sdn Bhd. — Maybank IB Research, Jan 5
Maintain neutral: Amid expectations of slower domestic consumption into 2012, we are overall “neutral” on the consumer space. Positively, this sector comprises resilient companies with strong balance sheets and strong cash flows.
Dividend yields are decent and average 4% across the sector for 2012, while capital management remains an ongoing theme. It is for these very reasons, however, that consumer stocks had significantly outperformed the FBM KLCI in 2011, and current valuations are fair, with the sector trading at a 2012 PER of 15.8 times.
Within the consumer sector, there are pockets of interest, retail being one of them.
While 2012 is likely to be a challenging year, our two stocks in this segment, Padini Holdings Bhd and Aeon Co (M) Bhd are likely to outperform their peers, in our view, due to strong management, their responsiveness to customer needs and strong balance sheets.
Padini’s move into Brands Outlets provides it with a whole new clientele base while Aeon’s property management division provides it with stable recurring earnings.
We have a “buy” on QL Resources Bhd for its strong earnings growth ahead, emanating primarily from its Indonesian operations. We are nevertheless “neutral” on MSM Malaysia Holdings Bhd and Beras Nasional Bhd due to price control issues that cloud their near-term outlook.
Tobacco and brewery stocks had significantly outperformed the FBM KLCI in 2011.
Tobacco and brewery stocks had significantly outperformed the KLCI in 2011. Capital management is likely to be an ongoing theme that will sustain interest in all four stocks but valuations are fair in our view. The tobacco stocks trade at a 2012 PER of 15.8 times while the brewers trade at 17.5 times. With the recent run-up, we downgrade Carlsberg Brewery (M) Bhd and Guinness Anchor Bhd to “hold” from “buy”.
We have two great companies in this category — Nestle (M) Bhd and Fraser & Neave Holdings Bhd (F&N). Trading at average 2012 PER of 23.1 times with average net yield of just 3.3%, we see little reason to own Nestle at this stage while F&N’s near-term outlook is clouded by potentially stiffer competition from Coca-Cola and Permanis Sdn Bhd. — Maybank IB Research, Jan 5
