The past three years have been muted in terms of consumer sentiment. However, 2018 is going to be a turnaround year, according to RHB. Improving job prospects, a higher wealth effect from rising property prices and stock market performances have all contributed to stronger consumer confidence. According to RHB, investors should take an overweight position on the consumer sector, thanks to recovering sentiment.
Consumer Sentiment To Grow Steadily With Time
With Singapore’s 2017 GDP growth hitting the higher end of economists’ estimates, consumer sentiment has been increasingly optimistic. The unemployment situation and job market in Singapore have alleviated since the end of 2017. Singaporeans’ unemployment rate has fallen to 3.1 percent in September 2017. The overall unemployment rate has also stabilised. With perception over job prospects in the next 12 months improving, consumers should show increasing willingness to consume.
Investors Takeaway: 3 Winning Consumer Stocks To Buy In A World Cup Year
Due to improving consumer sentiments, RHB believes that consumer cyclical stocks with exposure to the market in Singapore could look interesting this year. In addition, with the World Cup coming this year, sales of snacks as well as alcoholic and non-alcoholic beverages to spike in the months of June and July.
- Food Empire Holdings
One of the key events in 2018 that would affect consumption patterns is the FIFA World Cup. For many football fans out there, this is a time when life comes to a standstill to watch the matches being broadcasted live. As consumers tend to snap up small bites and drinks while watching the games, producers and retailers would typically receive a sales booster.
Given that this year’s World Cup is held in Russia, Food Empire Holdings is one of RHB’s top pick for the consumer sector. Food Empire derives 40 percent of its revenue from Russia. According to RHB, an uplift in economic activity aided by the World Cup would help raise overall domestic consumption in Russia.
BUY, TP $1.00 (Current share price: $0.665)
- Dairy Farm International Holdings
RHB highlights Dairy Farm International Holdings as a bellwether retail stock with exposure across the Asian markets in various categories ranging from supermarkets, health & beauty to home furnishings.
RHB notes that the supermarket segment in South-East Asia has been the main drag to its result last year. As we head into 2018, the pick-up in consumer sentiment in the regional economies would lend support to the group’s supermarket segment. Dairy Farm’s other higher-margin segments like health & beauty and home furnishing could continue to hold up. This will lead to higher margins for Dairy Farm.
BUY, TP US$9.53 (Current share price: US$8.48)
- BreadTalk Group
In the F&B space, BreadTalk Group (BreadTalk) is RHB’s choice for inclusion into portfolio. RHB expects stronger same-store-sales on recovering domestic consumption. More importantly, RHB foresees the expansion of its bakery franchisee network would bring about higher-margin revenue growth. RHB notes that further upside could be driven by the unlocking of value when BreadTalk divests more of its investment properties.
BUY, TP $1.83 (Current share price: $1.73)