Poised to Enjoy FY23
Key Takeaways:
• Despite higher inflation, we believe consumer sectors should remain resilient through the rest of the year, mainly supported by: 1) maintaining purchasing power as jobs & incomes are high; 2) a gradual increase of MT, which supports f&b absorption; 3) lower commodity prices.
• Moreover, given that elections will be held in early 2024, we expect populist policies will start to be implemented.
• We calculate that the nationwide MT managed to up by +5.7% YTD in Sep-22, this might increase product absorption, such as FnB (ICBP, INDF) and personal care (UNVR), thus lowering the DIO.
• We expect CPO and wheat prices to be relatively moderate on the back of higher Australia's wheat production (+13.9% YoY) and flat global demand, hence lifting the margin.
• We remain concerned regarding the robust taxes collection, especially from excise-tax plans on tobacco, plastic products, and particularly sugary drinks (MBDK) as related beverage segments contribute 15-21% of the revenues.
•We maintain an Overweight recommendation for the consumer sector as we assessed purchasing power remains stable amidst the potential economic slowdown may happened in FY23F, supported by a minimum wage hike, increasing subsidy budget, and the political year ahead.
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