The trend of health and wellness is coming, analysts are optimistic about the consumer products sector | Lianhe Zaobao

The trend of health and wellness is emerging, and analysts are optimistic that the local healthcare and beauty sectors will benefit, believing that DFI Retail Group and Sheng Siong Group are two consumer stocks worth paying attention to. DBS Group research analysts Pool Zhengfeng and Shen Liqin recently released a report indicating that the proportion of cosmetics, personal care, and pharmaceutical products in local overall consumption has increased, reaching 7% in the first ten months of last year, up from 6.8% in the same period the previous year. "From February to October last year, clothing sales faced a decline, while cosmetics, personal care, and pharmaceuticals maintained stable growth." "Local consumers are allocating more spending to health and beauty products, and we expect this trend to continue until 2026." In light of this trend, Pool Zhengfeng and Shen Liqin are optimistic that DFI Retail Group and Sheng Siong Group will benefit. DFI Retail Group's Guardian has long been involved in the health and wellness sector and has a high brand recognition. They also mentioned that another attractive aspect of DFI Retail Group is that it distributed an unexpectedly high special dividend last year and is actively improving operational efficiency, which is beneficial for future profit margins. Additionally, they observed that DFI Retail Group's forward P/E ratio is only 19 times, making its valuation still attractive. They have given a "Buy" rating with a target price of $4.50. As for Sheng Siong Group, Pool Zhengfeng and Shen Liqin believe the company should benefit from the SG60 neighborhood shopping vouchers and its continuously expanding store network. However, they also cautioned that Sheng Siong Group's forward P/E ratio has reached 24 times, and the stock price is likely to have already reflected all positive factors. Further Reading Sheng Siong Group's net profit in the third quarter increased by 12% to 43.8 million The index is expected to rise over 20% for the whole year of 2025, with Seoul up over 70%, leading the Asia-Pacific Two analysts gave Sheng Siong Group a "Hold" rating, with a target price of 2.60 SGD. On the other hand, as raw material costs decline, Chi Zhengfeng and Shen Liqin are optimistic that packaged food companies will benefit. For example, Delfi can benefit from the softening prices of cocoa and sugar; the decline in molasses and resin costs will also help improve the margins of Thai Beverage. "Over the past 12 months, most of the major raw material prices tracked for the packaged food companies we follow have seen double-digit declines, with aluminum being one of the few exceptions." In terms of investment recommendations, the two analysts gave Thai Beverage a "Buy" rating, with a target price of 0.62 SGD. "In the fiscal year 2026, Thai Beverage will mainly benefit from improved demand and declining costs." As for Delfi, Chi Zhengfeng and Shen Liqin gave a "Hold" rating, with a target price of 0.80 SGD. They stated that while the significant correction in cocoa prices is favorable for Delfi's profitability, the company may still need several quarters to fully digest the cocoa inventory purchased at high prices. "Additionally, the recovery of the consumption environment in Indonesia is still in its early stages, so we expect Delfi will need some time to reach a profitability inflection point."