Sunday, January 19, 2014

Malaysia 2014 -CONSUMER SECTOR -Challenging 2014 (M&A)

Strategy Outlook- Malaysia 2014
CONSUMER SECTOR
(Neutral)
“Challenging 2014”
Outlook. We expect Malaysian consumers will face a few challenges next year. The main challenges are the
1) rising cost of living and
2) decelerating in purchasing power.

These are due to the increase in the prices of goods and services. The recent increase in fuel prices and electricity tariff hike effective by 1st January 2014 would be among the cause of acceleration in inflation. We have a NEUTRAL call on the sector with Parkson (BUY; TP: RM4.29) as our top pick.


The consumer sector consist of two sub-sector which are 1) food and beverages (F&B), and 2) retail industries. Consumer sector depends on the net income of the household in the economy and with a rising cost of living, consumers will be thrift in their spending but we foresee it will offset by targeted government financial assistance (e.g. minimum wage policy and BRIM 3.0) to stabilize the situation.

Stock coverage performance. Nestle (HOLD; TP: RM67.24) outperformed our expectation in 9M13 driven by strong domestic growth powered by continuous investment in marketing and promotional activities for several of its product categories. Nestle net profit jumped 14% y-o-y to RM461 million compared to RM406 million in 9M12. Amway (HOLD; TP: RM13.00) also showed a positive performance in 9M13, with net profit grew by 9% y-o-y to RM80 million from RM74 million in 9M12 due to positive impact of rigorous sales and marketing programs.

Subsidies. The government allocated almost RM47 billion in 2013 for various type of subsidies, including for petroleum product, basic foods, health, agriculture and fisheries, utilities, toll as well as welfare and education. To highlight, government has cut the local petrol (RON 95) and diesel subsidy by RM0.20 resulting in higher pump prices to RM2.10 and RM2.00 from RM1.90 and RM1.80 respectively effective in September 2013. Sugar subsidy was also abolished by RM0.34/kg making a retail price of RM2.84/kg for granulated sugar and RM2.94/kg for fine granulated sugar effective on 26th October 2013. Reducing subsidies for local pump and sugar will affect consumers‟ spending but we foresee a less-than-catastrophic impact for consumer thanks to government‟s financial assistance such as BRIM, school aids and book voucher.

GST. In Budget 2013, the government proposed goods and services tax (GST) of 6% effective 1st April 2015 and abolishment two types of tax incurred by consumer such as sales tax and service tax. We foresee GST system to give more advantage for consumer of which they will only need to pay tax once and the price will be cheaper. Note that GST also will not be imposed on: 1) basic food (rice, sugar, salt, flour, cooking oil, lentils, herbs and spices, salted fish 2) pipe water supply, and the first 200 unit of electricity per month for domestic consumers; 3) services provided by government (issuance of passports, licenses, health services and school education; 4) transportation service (bus, train, LRT, taxi, ferry, boat, highway toll) 5) sale, purchase and rental of residential properties as well as selected financial services.

Acceleration cost of breathing. We are positive on the government‟s decision to give one-off cash assistance of RM300 to households and continue giving school aid as much as RM100 to all primary and secondary students to ease the burden of schooling expenses. Government will also continue to provide 1Malaysia Book Voucher valued at RM250 to each student to ease the burden of students in pre-university and institution of higher learning in purchasing books and reference materials.

In all likelihood, the higher cost of living will almost certainly jack-up and fan inflationary pressure. On that score, inflation is poised to jump to 3%-4% in 2014 from approximately 2% this year as we anticipate another round of pump prices revision in 2014. All these including the revision in essential goods prices will affect spending especially the luxury goods item. Overall all, we expect consumers spending to be a bit restrained next year.



Source/Extract/Excerpts/来源/转贴/摘录: M & A Securities
Publish date: 07/01/14

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
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“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
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每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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