RHB has reaffirmed its ‘overweight’ rating on the retail staples sector, citing its defensive nature and resilience in earnings. The report, released on 27 August 2025, identifies Sheng Siong and DFI Retail Group as top picks, with expected earnings compound annual growth rates (CAGRs) of 10% and 13% respectively from FY24 to FY27. The sector is projected to maintain a price-to-earnings ratio of 15-18 times for FY26, with a 4% yield.
The report emphasises Sheng Siong’s growth potential through the opening of new stores, whilst DFI Retail Group is highlighted as an earnings recovery play due to corporate restructuring. Analyst Alfie Yeo notes, “Our investment thesis remains intact, with both companies poised to deliver on earnings and dividends.”
This analysis comes amidst a broader economic landscape where RHB is also monitoring global economic trends, including potential fading industrial production momentum in the second half of 2025. The retail staples sector’s stability offers a buffer against such uncertainties, making it an attractive option for investors seeking reliable returns.
Looking ahead, the sector’s performance will be closely watched, particularly in light of ongoing corporate strategies and market conditions. RHB’s continued ‘overweight’ stance suggests confidence in the sector’s ability to navigate challenges and sustain growth.
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