10 Stocks That Might Benefit From The Policies of The New Malaysia Government

The new Malaysia Government has only been formed six days ago. However, they have long published a 150-page manifesto to guide them to achieve their objective for the next 5 years.

We dug through the manifesto to better understand what is the government’s plan for the future and how these policies might affect many of the companies listed on Bursa Malaysia.

Here are 10 companies which we feel might benefit from the policies set out in the new manifesto.

Abolish GST

The 6% Good and Service Tax (GST) implemented by the previous administration have been blamed for much of the inflation suffered by Malaysian in the past few years.

A key objective of the new government is to abolish the GST regime. This could help in reducing the prices of daily items for the people. Thus, consumer staples companies might see a direct benefit once the regime is abolished.

Here are some consumer companies worth mentioning.

Nestle Malaysia Bhd: One of the largest consumer companies in the country, owning popular brands like Milo, Nescafe and Maggi, which are considered staple food and beverages in Malaysia.

Dutch Lady Milk Industries Bhd: The dairy company owns popular brands like Dutch Lady, making products from milk, chocolate drinks, baby formula to yoghurt.

Fraser & Neave Holdings Berhad: The 135-year-old company has long been a well-known brand in Malaysia and part of the people’s daily consumption. They own popular brands like 100Plus, Ice Mountain Water, and F&N.

Spritzer Bhd: One of the largest bottled water manufacturer in the country. Spritzer prided itself as a natural mineral water bottler, emphasizing on the purity of its water source.

The Breweries: Malaysia only has two licensed breweries in the country. Carlsberg Brewery Malaysia Berhad and Heineken Malaysia Bhd are two breweries with extremely long history in the country and might see its demand improve as its cost declines.

Padini Holdings Bhd: A fashion brand for the mass market, Padini Holdings has been expanding its reach within the country and abroad as well. If it is able to bring its cost down, there might be an even larger market for its products.

Takaful Insurance For Farmers And Fishermen

The government is looking into improving the lives of those in the agriculture sector. One policy is to increase the Takaful Insurance coverage for farmers and fishermen, a segment that was deeply under-served previously.

Syarikat Takaful Malaysia Berhad, one of the largest takaful insurer in the country, could see a much bigger market for itself going forward.

Encouraging First Car Ownership

Apart from improving public transportation, the new government is also encouraging new car ownership. This is done by looking at giving our fuel subsidies for small capacity motorcycles and cars. On top of that, the government will also look at reducing excise duty on import cars below 1600cc. Automotive companies such as UMW Holdings Bhd and MBM Resources Bhd which focused on small vehicles might stand to benefit from these policies.

Here are just some of our initial research on interesting companies that might have a more favourable environment going forward. However, these manifestoes are merely just a guideline for the government. Whether some of these are in fact implementable are still uncertain. Therefore, it is important for investors to understand the risks involved with these companies before rushing to invest in any of them.

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Stanley Lim, CFA

Stanley Lim has spent the last decade in the investment industry. Over the course of his career, he has kick-started a few businesses, worked in the family office industry and most recently in the investment advisory industry. He has been a writer and analyst for The Motley Fool Singapore from 2013 to 2017. He has written close to 2000 articles online, on investment education and market analysis. He is the co-writer of the investment book: “Value Investing In Asia”, published in 2018. Stanley is currently the chief editor of Value Invest Asia.

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