Singapore Consumer Sector - RHB Invest 2020-12-08: Consumption In Post-COVID; Upgrade To OVERWEIGHT

Singapore Consumer Sector - RHB Investment Research | SGinvestors.io GENTING SINGAPORE LIMITED (SGX:G13) JUMBO GROUP LIMITED (SGX:42R) SHENG SIONG GROUP LTD (SGX:OV8) DAIRY FARM INT'L HOLDINGS LTD (SGX:D01) THAI BEVERAGE PUBLIC CO LTD (SGX:Y92)

Consumer Sector - Consumption In Post-COVID; Upgrade To OVERWEIGHT

  • Upgraded consumer sector to OVERWEIGHT; we prefer staple foods companies with exposure to a domestic recovery play.
  • Consumer companies with exposure to the reopening of domestic activities, such as those in retail and food & beverage services, should see some earnings recovery in 2021F, from a low base in 2020.
  • Local demand would also be supported by an increase in savings arising from travel restrictions, pent-up demand, and consumers becoming more accustomed to distancing themselves from COVID-19 risks. Furthermore, many firms restructured their opex to make it more variable, achieved through higher gross turnover rentals and lower base rental rates, as well as using more casual labour. These initiatives would mitigate the sharp rise in expenses, when revenue increases.



Cautious on tourism-related names - Jumbo Group, Genting Singapore



Some stay-at-home trends to prevail after the pandemic.

  • On the other hand, businesses that have benefited from lockdowns and the stay-at-home trend should see earnings moderate in 2021, as consumers transit into a post-COVID-19 world. Nonetheless, we note that COVID-19 has triggered some lasting trends that may continue even after the pandemic has been tamed, such as work-from-home (WFH), healthier lifestyles, and a greater emphasis on home entertainment. This could result in structural changes to consumption patterns.
  • As such, businesses that did well during the lockdowns may continue to see elevated demand, compared to pre-COVID-19 days – even as sales taper down from the lockdown periods. Sub-sectors such as e-commerce, home furnishing, sports & recreational retail, online entertainment, as well as grocery retail are potential beneficiaries.


Thaibev is our Top Pick for the sector in 2021F



We continue to like Sheng Siong



Dairy Farm’s valuation is undemanding comparatively


Key downside risks to our sector outlook:

  • A slower-than-expected economic recovery, prolonged restrictive measures as a result of the COVID-19 pandemic, and a resurgence of COVID-19 infections.





Juliana Cai RHB Securities Research | https://www.rhbinvest.com.sg/ 2020-12-08
SGX Stock Analyst Report NEUTRAL MAINTAIN NEUTRAL 0.720 SAME 0.720
SELL MAINTAIN SELL 0.190 SAME 0.190
BUY MAINTAIN BUY 1.870 SAME 1.870
BUY MAINTAIN BUY 4.470 SAME 4.470
BUY MAINTAIN BUY 0.820 SAME 0.820



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