Consumer firms on investors’ radar in face of tariff war
The country’s improving macroeconomic backdrop is making consumer-focused firms investors’ best bet in the next 12 months, albeit with a warning that some may remain vulnerable to global tariff pressures.
In their latest Philippine Industry Focus report, First Metro Securities Brokerage Corp. and Singapore’s DBS Bank chose Puregold Price Club Inc., SM Investments Corp., Robinsons Retail Holdings Inc., Jollibee Foods Corp. and Wilcon Depot Inc. as their top picks to move with agility since these companies have broader consumer reach, brand strength, pricing power to sustain profitability and high dividend payouts.
First Metro and DBS noted domestic consumption was showing early signs of recovery, thus providing cushion for consumer-centric firms.
They noted household spending was particularly encouraging as it rose by 5.3 percent, faster than the full-year 2024 pace of 4.85 percent.
“The reacceleration in domestic demand is supported by five consecutive months of positive retail sales growth, signaling willingness to spend,” First Metro and DBS said in their June 12 report.
This was primarily driven by cooling inflation, which averaged 1.9 percent in the January to May period.
For the entire year, DBS expects average inflation to settle at 2.6 percent, or closer to the lower end of the government’s target range of 2 percent to 4 percent. This is also slower than the 3.2 percent recorded last year.
While this widens the path to stronger earnings for Philippine firms, First Metro and DBS also recognized that recovery may not be the same for all listed companies, especially since spending patterns were constantly shifting.
They cited global data analytics firm Euromonitor in saying that Filipino consumers scored higher than the global average “in terms of willingness to try novel goods and services.”
“This behavior tends to weaken brand loyalty, especially as consumers gain access to a broader range of choices,” First Metro and DBS noted.
For example, Dali and Alfamart convenience stores have recently gained traction due to their accessibility and alternative offerings that can be cheaper than the usual choices.
Additionally, First Metro and DBS explained that tariff exposure also varied among firms. For companies like RRHI, SM Retail and SSI Group, the impact of the ongoing tariff war was seen to be relatively minimal since these firms source their products primarily from Asia.
Food and beverage manufacturers like Century Pacific Food Inc., San Miguel Corp., Universal Robina Corp., Emperador Inc. and Monde Nissin Corp., on the other hand, may face broader macroeconomic risks because of their exposure to international markets.
“While the overall outlook for consumption remains positive, we anticipate that revenues will be shaped by evolving trends and structural shifts,” First Metro and DBS said.
“The outcome of ongoing tariff negotiations remains a wild card, with the potential to either support or hinder sector performance,” they added.
