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Singapore’s downstream food and beverage services sector is set to have a promising year ahead, with stronger consumer demand and a stronger economic outlook expected, according to RHB’s analysis.
RHB Equity analyst Alfie Yeo expects Singapore’s GDP growth to jump to 3% this year, a sharp increase from 1.5% last year.
Yeo attributed the growth to an increasingly favourable external environment, which had a positive impact on consumption and income.
“This will eventually translate into more positive consumption and labour income as domestic industries recover and benefit from stronger global demand,” Yeo said.
However, RHB rated the sector as “neutral”, noting that the foodservice index has surpassed pre-pandemic levels. This growth was mainly driven by the success of cafes, food courts and other mass-market restaurants that offer affordable dining options.
In the coffee chain sector, Golden Taste Coffee stands out and is expected to outperform its peers with its continued store expansion and bright prospects in the coffee shop market.
Yeo said he placed greater emphasis on the coffee shop’s resilience, especially in light of the recent distribution of S$250 Community Development Committee (CDC) vouchers.
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“We prefer coffee shops, which are more resilient, to fast-food restaurants… We expect coffee shop consumption to remain high this year, especially with the recent issuance of $250 Community Development Council (CDC) vouchers,” Yang explained.
On the other hand, Nippon Foods may face hurdles in the coming year. RHB is cautious about the company’s earnings outlook for FY2025, expecting high operating costs and limited human resources to pose challenges.
Therefore, while RHB gives Kimly a “buy” rating, Japanese Foods receives a more conservative “neutral” rating.
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