The prices of food commodities have been on an uptrend due to a perceived tight supply. Amid concerns of how this will affect bottomlines, OSK believe that the share prices of food companies will lag in 2011.
OSK think that the near term negative impact on bottomlines is inevitable as companies adjust to higher raw material prices. On the other hand, OSK believe the retail industry will continue to deliver good earnings in 2011 driven by strong consumer spending and companies’ expansion plans.
OSK downgrade the F&B subsector to NEUTRAL, with CI Holdings and QL Resources as our top picks while we maintain OVERWEIGHT on the retail industry, with Parkson remaining our favorite stock.
Below are the target prices and ratings for selected consumer product stocks.