Impact POSITIVE

Measures

• A 2% income tax cut for annual income bracket of RM50-100k, tax savings of up to RM1k and RM250 for the middle-income group and high-income group, respectively.

• One-off assistance for households with five children or more, with income less than RM2.5k per month to receive RM2.5k under Bantuan Keluarga Malaysia (BKM) Program.

• One-off e-Pemula scheme of RM200 credit to e-wallets for teenagers aged 18-20 and full-time students aged 21 and above.

• Providing RM100 e-wallet credit to qualifying individuals in M40 through M40 e-Pemula Initiative.

• Establishment of Multi-Agency Task Force to address cigarette and alcohol smuggling.

• Tightening control of imports of alcohol and tobacco at entry points including private jetties.

• Limiting transhipment of alcohol to select ports only.

• Designating the Customs, Immigration and Security Complex in Bukit Kayu Hitam as the single exit point for the northern territories.

• Special allocation to beef up enforcement to curb smuggling of alcohol and tobacco

Comments

• We are positive on the cash support for M40, B40 and students and income tax cut of 2% which are expected to increase consumer spending on goods and services such as F&B and daily essentials.

• Regarding tobacco and breweries, we are largely positive on the increased efforts to curb smuggling as quashing such black markets means the industry should see an increase in legal market share, driving up sales volume.

• There are risks of bottlenecks at the ports depending on the scale of operations. However, we are unable to comment without further details.

Beneficiaries

• Largest potential beneficiaries are the mid-market retailers such as AEON (OP; TP: RM1.95) and PADINI (OP; TP: RM4.10) as well as CVS players such as MYNEWS (OP; TP: RM0.52), as we expect retail sales to get a booster from strong consumer spending, given the extra cash support and tax savings.

Source: Kenanga Research - 8 Oct 2022