Consumer Sector - RHB Invest 2020-08-28: Tighten Your Belt, Pick Selectively

Consumer Sector - RHB Invest | SGinvestors.io THAI BEVERAGE PUBLIC CO LTD (SGX:Y92) DELFI LIMITED (SGX:P34) FOOD EMPIRE HOLDINGS LIMITED (SGX:F03)

Consumer Sector - Tighten Your Belt, Pick Selectively

  • Although we have started to see more optimism in the market as regional economies bottomed out in 2Q20, the economic toll and rise in unemployment resulting from COVID-19 are likely to persist into 2H20- 2021. This should pose continued challenges to overall consumption. We expect a full recovery only in 2022.
  • Prefer defensive staples, with some exposure to recovery play.
  • Maintain NEUTRAL on the sector; Top Pick: Thai Beverage (SGX:Y92).



Rising unemployment rates to impede consumer confidence and spending.

  • The hospitality sector is most severely impacted by COVID-19 with the absence of global travel. Retail, transport and other related sectors have not been spared either as locals are bound by social distancing measures while tourist spending ceased. Economies dependent on global trade and overseas remittance are also badly hit.
  • Without a vaccine, we do not expect things to return to normal in 2021. We expect unemployment to stay high, especially for the sectors that have taken a direct hit from COVID-19. Moreover, as government support tapers moving into 2H20 and 2021, retrenchment pressure should remain.
  • Although consumer confidence in the region has bottomed, with most nations relaxing national lockdowns and seeing a gradual resumption of activities, job insecurities, economic uncertainties and, high household debt will continue to weigh down on 2021 consumer sentiment and spending.


Tourist-dependent operations would take longer to recover.



Defensive names still preferred.






Juliana Cai RHB Securities Research | https://www.rhbinvest.com.sg/ 2020-08-28
SGX Stock Analyst Report BUY MAINTAIN BUY 0.720 SAME 0.720
NEUTRAL MAINTAIN NEUTRAL 0.800 SAME 0.800
BUY MAINTAIN BUY 0.750 SAME 0.750



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