Malaysia Consumer Sector: Comprehensive Analysis for 2025

Date: January 10, 2025

Broker: Maybank Investment Bank Berhad

Overview of Malaysia’s Consumer Sector in 2025

Maybank Investment Bank Berhad presents an optimistic outlook for Malaysia’s consumer sector in 2025, fueled by heightened consumer spending driven by government-supported measures. While cost pressures from utilities and labor costs persist, these challenges are expected to be manageable. The consumer staples segment, particularly Food & Beverage (F&B), is poised for strong growth. Here’s a detailed breakdown of the top companies and their strategies for 2025.

Top Picks in the Consumer Sector

The report identifies AEON, MRDIY, and Farm Fresh (FFB) as standout performers for 2025, owing to their robust strategies to capitalize on increased consumer spending. Other notable companies like Nestle (NESZ), Carlsberg (CAB), Heineken (HEIM), and QL Resources (QLG) are also expected to benefit from the improving macro environment.

AEON Co. (M): A Resilient Retail Giant

Recommendation: Buy
Target Price (TP): MYR1.95
Upside: 30%

AEON stands out as a top pick for 2025 with its dual focus on mall rejuvenation and retail segment growth. The property management segment is expected to thrive as AEON continues rejuvenation exercises across 3 to 5 malls, targeting higher occupancy rates (currently at 95%) and average rental reversions. Additionally, AEON plans to open a new shopping mall in KL Midtown by late 2025 or early 2026.

With government initiatives like EPF Account 3 withdrawals, civil service salary hikes, and a minimum wage increase to MYR1,700/month, AEON’s retail segment is poised for growth. The retail revenue mix currently includes foodline (56%), softline (16%), health and beauty care (15%), and hardline (13%). The company maintains its “Buy” recommendation with a projected 4.5% core EPS growth in FY25.

MR DIY Group (MRDIY): Expanding Horizons

Recommendation: Buy
Target Price (TP): MYR2.35
Upside: 31%

MRDIY continues to dominate the mass market with its wide product range and affordable pricing. With plans to open 190 new stores in 2025—including 20 KKV stores—the company anticipates robust sales growth of +25% YoY. East Malaysia stores, which typically outperform Peninsula Malaysia locations by 15%, are a key focus area.

The completion of a fully automated warehouse in August 2024 is expected to drive annual cost savings of MYR10–20 million once operational in February 2025. MRDIY’s strong consumer appeal and strategic expansion plans solidify its position as a “Buy.”

Farm Fresh Berhad (FFB): Leveraging Resilience

Recommendation: Buy
Target Price (TP): MYR2.05
Upside: 14%

Farm Fresh benefits from the stable demand for its dairy products, supported by capacity expansion across its Malaysian processing plants. The company has secured its whole milk powder needs through May 2025, ensuring stable production costs in the near term.

Farm Fresh’s recent launch of “Cream Hauz” ice creams has been well-received, and its regional expansion in the Philippines is a promising growth avenue. With a projected core EPS growth of 68.5% in FY25, the company is a solid “Buy.”

Nestle Malaysia (NESZ): A Consistent Performer

Recommendation: Buy
Target Price (TP): MYR111.50
Upside: 19%

Nestle Malaysia’s focus on broad-based consumer spending is expected to drive earnings growth. Despite price adjustments of 5–6% on core products like MILO, MAGGI, and NESCAFE in 2024, easing raw material prices and a stronger MYR will support margins. The company is expected to deliver steady growth as consumer sentiment improves.

Carlsberg Malaysia (CAB): Brewing Success

Recommendation: Buy
Target Price (TP): MYR23.10
Upside: 18%

Carlsberg remains a strong contender in Malaysia’s brewery market. Despite price increases in 2024 due to higher input costs, the easing of raw material prices and improved consumer spending will aid its performance in 2025. With a projected dividend yield of 5.2%, Carlsberg offers an attractive investment opportunity.

Heineken Malaysia (HEIM): A Steady Competitor

Recommendation: Buy
Target Price (TP): MYR30.20
Upside: 29%

Heineken’s dual price adjustments in 2024 were well-received in the market. With a projected dividend yield of 5.8% and stable input costs, the company remains a key beneficiary of Malaysia’s recovering consumer sentiment.

QL Resources (QLG): Diversified Strength

Recommendation: Hold
Target Price (TP): MYR4.70
Upside: 3%

QL Resources benefits from its diverse revenue streams, including marine products, palm oil, integrated livestock, and convenience stores. While the company faces labor cost pressures due to the minimum wage hike, its diversified business model offers resilience against such challenges.

Leong Hup International (LHIB): Poultry Leader

Recommendation: Buy
Target Price (TP): MYR0.85
Upside: 49%

Leong Hup is expected to benefit from easing poultry feed costs, driven by falling corn and soybean prices. While labor cost increases are anticipated, higher sales volumes and lower input costs will offset these pressures.

DXN Holdings (DXN): Growth Potential

Recommendation: Buy
Target Price (TP): MYR0.80
Upside: 55%

DXN’s reliance on international markets makes it less vulnerable to domestic currency fluctuations. With a projected dividend yield of 6.9%, the company is poised for solid growth in 2025.

7-Eleven Malaysia (SEM): Convenience Giant

Recommendation: Hold
Target Price (TP): MYR1.90
Upside: -3%

While 7-Eleven remains a household name, rising labor costs and other operational pressures are expected to weigh on its profitability. Its focus on convenience, however, ensures steady consumer demand.

Padini Holdings (PAD): Fashion for the Masses

Recommendation: Buy
Target Price (TP): MYR2.53
Upside: 23%

Padini’s affordability and focus on value-priced items make it a key beneficiary of Malaysia’s increasing disposable income. The company’s strong brand appeal and strategic pricing position it well for growth in 2025.

Mynews Holdings (MNHB): A Comeback Story

Recommendation: Buy
Target Price (TP): MYR0.80
Upside: 19%

Mynews is set for recovery in 2025, supported by a focus on higher-margin products and operational efficiency. While labor costs remain a challenge, the company’s strategic initiatives ensure a positive outlook.

Key Risks to the Sector

The consumer sector faces potential risks, including unexpected spikes in raw material costs, currency depreciation, and regulatory changes. Additionally, targeted fuel subsidy rollbacks and rising utility costs could pressure consumer spending. Despite these challenges, the sector is well-positioned to capitalize on improving economic conditions in 2025.

Conclusion

Malaysia’s consumer sector is poised for growth in 2025, driven by favorable macroeconomic factors and strategic initiatives from leading companies. With top picks like AEON, MRDIY, and Farm Fresh leading the charge, investors should closely monitor this dynamic sector for promising opportunities.