Singapore food manufacturers in for a treat as consumption recovers in 2024

Many would benefit from recovering consumption across Thailand, Vietnam, and Indonesia.

Singapore midstream food manufacturers and brand owners will benefit from consumption recovery across Thailand, Vietnam, and Indonesia, a report by RHB said.

Consumer confidence indices (CCI) for Thailand and Indonesia are at robust levels compared to last year. Thailand’s CCI, in particular, saw a marked recovery post-resolution of its prime minister’s appointment. Meanwhile, Indonesia’s CCI has also improved since September 2022. 

The outlook for Indonesia is more upbeat than that of Thailand, as the former’s CCI has reached near pre-pandemic levels, at 120-130pts. Thailand’s CCI continues to recover in its overall reading from its low of 40pts, and has further room to improve, as the current level of 70-80pts is still below pre-pandemic levels. There is no CCI for Vietnam. 

Additionally, gross domestic product (GDP) is expected to accelerate for Thailand and Vietnam from 3.5% and 4.7% YoY, respectively to 4% YoY and 6.4% YoY in 2024. Indonesia’s GDP growth is expected to stay at a robust 5% YoY next year.

Companies like Delfi, with its exposure to Indonesia’s consumption recovery and Thai Beverage which is set to benefit from Thailand and Vietnam’s recovery including an increase in tourist spending, can expect earnings growth for FY2024 and FY2025 at 5.7% and 6.3% YoY, respectively

“This, in turn, would stem from improved consumer demand and spending. Especially for the midstream branded food manufacturers, we expect more aggressive spending on marketing, launches of new products and product variants, and more robust tourist spending to drive growth. There were no sub-sector earnings changes in the recent quarter ending June, as the earnings performance has tracked within our expectations,” RHB analyst Alfie Yeo said.