Consumer Stock by OSK

We maintain our OVERWEIGHT call on the consumer sector and prefer food producers given the stable demand for their products. We are NEUTRAL on the retail segment on account of the near-term margin erosion despite their promising longer term fundamentals and robust dividend yields. For exposure to the food segment, we like QL RESOURCES (BUY, TP: RM3.68) and LTKM (BUY, TP: RM1.27) for the stable demand for basic agrifood. For retail exposure, we like PARKSON (BUY, TP: RM5.50), which is poised to ride on the strong recovery in China’s domestic consumption, AEON (NEUTRAL, TP: RM4.40) and PADINI (BUY, TP: RM2.94). Riskaverse investors should consider recession-proof companies like NTPM (BUY, TP: RM0.54) and HAI-O (BUY, TP: RM5.20), which offer downside protection and promising dividend yields. We expect the earnings pressure on consumer related stocks to ease towards the latter part of this year.