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BIMB Securities keeps 'overweight' call on consumer sector amid Sarawak's push to raise household income

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Publish date: Tue, 24 Sep 2024, 02:56 PM

KUALA LUMPUR (Sept 24): BIMB Securities kept its "overweight" call on the consumer sector, particularly the food and beverage segment and value retailers, amid Sarawak's push to raise household income.

After a recent meeting with Department of Agriculture Sarawak (DOAS), BIMB noted that the agency's efforts could further increase the mean household income in the state.

"These strategies are likely to raise the overall median income of the Sarawak populace, which will positively impact the consumer sector," said BIMB in a note on Tuesday.

BIMB noted that Sarawak ranks 10th among Malaysian states with a mean household income of RM6,457 compared to Selangor’s RM12,223 and Kuala Lumpur’s RM13,325.

The research firm's picks for the consumer sector include MR DIY Group (M) Bhd (KL:MRDIY), on which it has a "buy" call and a target price (TP) of RM2.49.

In the staples segment, BIMB likes Farm Fresh Bhd (KL:FFB) ("buy", TP: RM2.02) and Spritzer Bhd (KL:SPRITZER) ("buy", TP: RM2.90).

Furthermore, the DOAS mission is to achieve a sustainable agro-community, aligning with Sarawak's Ministry of Food Industry, Commodity and Regional Development’s goal of advancing the agriculture sector and rural economy by 2030.

These initiatives are designed to support the state government’s Sarawak Post Covid-19 Development Strategy (PCDS) 2030.  

The note highlighted that its focus includes high-impact projects such as smart farming parks, permanent food production zones, privatisation of agriculture land and stations, CPPCs, food terminals, agrofood incubators, and the Aquaculture Industrial Zone.  

DOAS targets industries involving food crops like durian, coconut, pineapple, and banana, it said.

Meanwhile, the agency is also focusing on paddy cultivation to reach a self-sufficiency level of 70% as per PCDS 2030 goals, along with aquaculture developments such as the cage culture for red tilapia fish in Batang Ai.

Additionally, DOAS emphasises downstream segments, including agro-products and agropreneurs.  

In 2023, agriculture contributed 10.6% to Sarawak’s gross domestic product, with local demand still reliant on imports.  

In 2022, DOAS received an allocation of RM22 million under the 12th Malaysia Plan to boost the production of coconut, durian, pineapple, and banana.  

As part of its initiatives, DOAS supports small farmers by lending them land for farming at a minimal annual charge of RM150.

At the time of writing Tuesday, MR DIY shares were up four sen or 2% at RM2.03, with a market capitalisation of RM19.2 billion. Meanwhile, Farm Fresh shares were down two sen or 1.1% at  RM1.72, with market capitalisation of RM3.2 billion, and Spritzer shares were unchanged at RM2.58, with market capitalisation of RM824 million.

 

https://www.theedgemarkets.com/node/727760

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