Consumer firms should brace for disapponting revenue growth: OCBC

Sentiment and spending turning more bearish.

OCBC expects for 2HCY13 that consumer-related companies under the FTSE Straits Times Consumer Services Index (FSTCS Index) will experience lower-than-expected revenue growth as sentiment turns bearish both domestically and abroad.

"With weaker economic data points (e.g. Indonesia’s GDP and China’s slowdown) re-affirming lingering economic uncertainty, consumer companies are likely to face challenges as consumers shift away from discretionary spending," the research firm explained.

"As we expect sell-offs of the sector to continue in light of these headwinds, we maintain our Underweight rating on the sector," it added.

OCBC said it currently favors counters with defensive qualities such as Sheng Siong over counters with high exposure to emerging Asia consumer demand like Petra Foods and counters with wafer-thin operating margins like BreadTalk.

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