Various stocks to gain from Budget 2018

Analysts: Consumer, logistics and manufacturing among winners

PETALING JAYA: While the construction sector is an obvious beneficiary of Budget 2018, stocks related to the consumer, logistics and manufacturing businesses are also likely to benefit from the budget.

Analysts have pointed out that the reduction in personal income taxes and allocations targeted towards the B40 and M40 would boost private consumption and positively benefit consumer-driven counters on Bursa Malaysia.

B40 and M40 refers to the bottom 40% and middle 40% of households respectively.

TA Securities Research said that apart from construction players, consumer sector stocks under its coverage are anticipated to benefit from Budget 2018.

“All in, we are positive as consumer companies would benefit from the higher spending power of consumers within the B40 and M40 groups and the expected increase in tourist arrivals.

“Allocation for various rail projects, airports, ports, hospitals and roads in the five main economic corridors are positive for the construction players such as Gamuda Bhd, Sunway Construction Group Bhd, WCT Holdings Bhd and Gadang Holdings Bhd.

“As for consumer stocks, we think the main beneficiaries under coverage are Aeon, Padini, Johore Tin, Hup Seng Industries, F&N, QL Resources, Nestle, BAT, Heineken and Carlsberg,” said the research unit in a note.

Meanwhile, AmInvestment Bank Research indicated that logistics and manufacturing players could also benefit from measures.

In support of Industry Revolution 4.0 investments and business activities, the Government will provide a matching grant of RM245mil under the Domestic Investment Strategic Fund to upgrade smart manufactur- ing facilities.

“Inari Amertron has indicated that the group intends to invest in automated inspection machines, which would cost about US$1mil per unit while V.S. Industry has budgeted RM20mil for investments in automation in FY18.

“Top Glove, Hartalega and Kossan, with robust capacity expansion though automation and the impending embrace of Industry 4.0, are also expected to benefit from the measures,” said the research house.

AmInvestment Bank Research also added that proposals in Budget 2018 targeted towards refurbishment and construction of airports are positive to the local transportation and logistics sector.

Note that, Budget 2018 includes allocation for the refurbishment of existing airports in Penang, Langkawi, Kota Bharu and Sandakan.

Apart from that, a new airport will also be developed in Mukah.

“We also believe the commencement of infrastructure construction in Digital Free Trade Zone (DFTZ) as a positive sign that this project is well underway, which should enhance the long-term outlook on the local logistics sector,” it said, adding that the Government has allocated RM83.5mil in Budget 2018 for the first phase of DFTZ.

We are positive as consumer companies would benefit from the higher spending power of consumers within the B40 and M40 groups. TA Securities Research