Nestle (Malaysia) Berhad

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
How the mighty have fallen. NESTLE is now RM70.00.

I'd start considering NESTLE around RM50. NESTLE still has a strong moat, albeit challenging times & slowing growth.

On side note, NESTLE's fall means that QL has been crowned as the new Consumer Stock King. (QL: 17.5B; Nestle: 16.4B)

Nestlé to Gain Momentum in Q1 on Improving Consumer Sentiment

There could still be light at the end of the tunnel for Nestlé (Malaysia) Bhd as it gathers momentum in the first quarter of 2025 (Q1 2025) supported by improving consumer sentiment.

The company's full-year net profit for the financial year 2024 (FY24) missed analysts' estimates but during its briefing with analysts, Nestlé said it saw an uptick in local sales, as reflected in the 1.8 per cent quarter-on-quarter increase in revenue in Q4 2024.

CIMB Securities Sdn Bhd said the increase in local sales took place despite the quarter being a "seasonally slower sales" quarter compared with Q3 2024.

However, Q4 2024 gross profit margins dipped 4.6 per cent year-on-year (YoY) to 26.7 per cent, attributed to an increase in commodity costs and a less-profitable sales mix due to increased consumer downtrading activity.
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"Nestlé is confident of a return to growth in FY25F with efforts to continue strengthening its market leadership across categories and a continuous focus on product innovation. The company aims to continue to launch more new products, with a focus on expanding its product portfolio to cater to a wider range of consumers," said the firm.
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The firm said Nestlé also noted signs of improvement in sales, particularly in Q1 2025, which it attributes to improved consumer sentiment and the gradual easing of the impact of boycott activities associated with the Israel-Palestine war.
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"In Q1 2025, we understand that Nestlé has recorded improvement in sales volume across a wide range of product categories, according to internal company data."
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CIMB Securities maintained a 'Hold' rating on the stock with a lower target price (TP) of RM92.
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Meanwhile, Maybank Investment Bank Bhd (Maybank IB) said Nestlé's FY24 core net profit of RM435 million accounted for only 84 per cent of the firm's' and consensus' full-year earnings estimates.
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"The earnings disappointment was largely from lower-than-expected gross profit margins from higher input costs.
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"FY24 revenue of RM6.2 billion was, however, in line at 100 per cent of our full-year revenue estimate," it said in a note.

The firm cut its FY25 and FY26 earnings estimates for Nestlé by 35 per cent and 29 per cent, respectively, after imputing lower gross profit margins of 29 per cent and 30 per cent.
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"With the Gaza war ceasefire, we believe that Nestlé's sales volume may see gradual recovery in Q1 2025 but it might not be sufficient to offset its higher production costs.

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"Nestlé may attempt to raise product prices to defend margins in FY25 but we believe its ability to fully pass on costs to consumers will be hindered by consumer affordability and their sensitivities to product price increases," it added.

Maybank IB downgraded Nestlé to 'Hold' with a lower TP of RM96.70.

Meanwhile, CGS International Securities Malaysia believes that the worst is over for Nestlé and currently builds on a four per cent YoY increase in domestic revenue in FY25.

"Management during the conference call noted that through Q4 2024 there were signs of improving consumer sentiment and this has gathered momentum into Q1 2025.

"It noted that ice cream sales were its canary in the coal mine, and there has been a shift towards premium products in recent months. It also feels that the easing of hostilities in the Middle East will help ease the impact of the boycott which impacted 2024 revenues," it said.

It said Nestlé raised prices for its coffee and cocoa products in Q4 2024, which should aid gross profit margins in the coming quarters.

The firm tweaked downwards its earnings estimates for the company by 1.6 per cent each year for FY25 and FY26 after factoring in the company's FY24 performance.

CGS International reiterated its 'Reduce' call on the stock with an unchanged TP of RM78.

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)

Extracted from The New Straits Times

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD) Support should be strong at RM85.00. If this breaks, RM76 is probable.

Nestle is still a well managed company suitable for the long term. It has a moat. It is a simple business that Buffett would approve of.

But with a rather high PE, investors have high expectations. More earnings disappointment would lead to further share price declines.

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by CGSI

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by TA Securities

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by RHB

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by HLIB

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by Maybank

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by Kenanga

KUALA LUMPUR: Nestle (M) Bhd anticipates a return to healthy growth by the first half of 2025, despite expectations of challenging market conditions that are progressively improving in the near term.

KUALA LUMPUR: Nestle (Malaysia) Bhd has brought back the nation's largest futsal tournament, Milo Hidup Bola, for its 18th edition.

© New Straits Times Press (M) Bhd

KUALA LUMPUR: Nestle (Malaysia) Bhd has partnered with Malaysian Red Crescent Society (MRCS) to support flood relief efforts amid the monsoon season.

© New Straits Times Press (M) Bhd

Top 10 RoE Companies in Bursa Malaysia.

Here are the top 10 companies with the highest RoE (Return on Equity). This ranking is based solely on RoE, a financial metric that measures a company's profitability relative to its shareholders' equity. RoE indicates how efficiently a company is using its equity to generate profits and is often used to benchmark companies within the same industry. However, it's important to be cautious, as RoE alone doesn’t provide a full picture of a company’s financial health and Stockbitors must remember to analyze companies from a variety of angles to get a better understanding of your investments!

$CARLSBG / 2836 (CARLSBERG BREWERY MALAYSIA BERHAD) $HEIM / 3255 (HEINEKEN MALAYSIA BERHAD) $NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD) $SEM / 5250 (7-ELEVEN MALAYSIA HOLDINGS BERHAD) $UCHITEC / 7100 (UCHI TECHNOLOGIES BERHAD)

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)

F&B Players in Bursa Malaysia!

As Malaysians, we love our food. From the cream crackers with teh to our roti canai, we enjoy our local snacks and dishes everyday. But, did you ever consider that there are public listed companies manufacturing the food and beverages with consume? The F&B industry in Malaysia includes a diverse range of companies which play a key role to our nation’s Economy. Some of these companies are deeply rooted in Malaysia, while others are global players with strong local presences.

Here’s a closer look at some of the listed F&B players on Bursa Malaysia! Which companies do you support, and would they make compelling investment choices? Let us know in the comment section below!

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD) $KLSE-F&N $DLADY / 3026 (DUTCH LADY MILK INDUSTRIES BERHAD) $HUPSENG / 5024 (HUP SENG INDUSTRIES BERHAD) $CCK / 7035 (CCK CONSOLIDATED HOLDINGS BERHAD)

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by TA
Hold – TP RM124.22

“Headwinds Persist in 2HFY24"

We left Nestlé (Malaysia) Bhd’s virtual analyst briefing with the following key takeaways:

1. Weaker Turnover in 2QFY24
2. 1H Gross Profit Remains Solid Despite Weaker Topline
3. Emphasising the Sustainability of the Group

Maintained HOLD with a lower target price of RM124.22/share (from RM136.9/share) based on DDM valuation (k: 6.4%; g: 3.0%).

Analyst:
Liew Yi Jiet
yjliew@ta.com.my

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by HLIB
SELL – TP RM 101.00

" Commodity pressures in 2H”

To recap, 2Q24 recorded decline in top line by -13% YoY on the back of deceleration in domestic sales (-16%), alongside flat showing from the export market (+0.4%). Management attributes this to three main factors namely (i) constraint in purchasing power; (ii) muted consumer sentiment; (iii) and high base effect from FY23. Despite its hedging policy, the group expects to see increased input cost inflation for coffee and cocoa in 2H24. We reckon that 2H24 will be a rather challenging period for the group with the declining sales impact from muted sentiment (possible boycott effect) coupled with commodities input pressures. Reiterate SELL with unchanged TP of RM101.00 based on DDM valuation methodology (r: 6.3%, TG: 3.0%). Nestle trades at a relatively high valuation level of 47.8x FY24 PE in comparison to its holding-co in Switzerland (17.9x FY24 PE) – which now seems harder to justify in view of its earnings decline. Additionally, we reckon the boycott sentiment coupled with cost pressures will continue to put a strain on its earnings moving forward.

Analyst:
Syifaa’ Mahsuri Ismail
syifaa@hlib.hongleong.com.my

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by Maybank
HOLD – TP RM120.00
" Post-briefing update”

NESZ’s outlook has become challenging as earnings growth potential now depends heavily on its ability to lower operating costs as topline growth is being constrained by weak domestic spending. No change to our earnings estimates. Maintain HOLD with an unchanged DCF-TP of MYR120.00 (WACC: 6.3%, LT growth: 2.5%). In Consumer, we prefer MRDIY (MRDIY MK, BUY, CP: MYR2.05, TP: MYR2.45).

Analyst:
Jade Tam
jade.tam@maybank-ib.com

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by TA
Under Review – TP RM136.90

“Cautious Outlook Continues for 2H"

We are currently reviewing our target price of RM136.90/share and Hold recommendation, pending further updates from today's analyst briefing.

Analyst:
Liew Yi Jiet
yjliew@ta.com.my

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by RHB
Neutral – TP RM119

“Subdued Consumer Sentiment Persists"

Maintain NEUTRAL with lower MYR119 TP from MYR131, 3% downside. Nestle’s 1H24 results underperformed expectations on lower-than- expected sales – negatively impacted by cautious consumer sentiment. Immediate-term earnings outlook is challenging, in view of the inflationary pressures constraining the consumer spending but we expect Nestle to weather through the challenging times thanks to its entrenched fundamentals. As such, we maintain our stance on the stock as the current valuation at -1.5 SD may have priced in the challenges.

Analyst:
Soong Wei Siang
soong.wei.siang@rhbgroup.com

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by MIDF
Neutral – TP RM126.00

“Headwinds Remain Amid Efforts to Mitigate Risks"

Nestle is currently trading at an FY25F P/E ratio of 35.6x, which is below its two-year average P/E ratio of 43.1x. Additionally, it offers a 2.6% dividend yield in FY24F. Downside risks include (i) a sudden increase in commodity prices, notably cocoa, coffee and dairy; (ii) surging energy costs which would disrupt the value chain; (iii) stronger USD against MYR exchange rates; and (iv) weaker-than-expected consumer demand due to macro-economic headwinds and consumer sentiments in line with geopolitical tensions, regulatory changes and inflationary pressures.

Analyst:
MIDF Research
research@midf.com.my

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by Maybank
Hold – TP RM120.00

“Feeling the bite of rising costs"

2Q24 results fell below our expectations on higher-than-expected raw material costs. With EPF Account 3 withdrawal and product price hikes coming through in 3Q24, this may mitigate further earnings downside in 2H24 despite expectations for subdued consumer sentiment to persist. Nevertheless, our FY24E-FY26E earnings estimates are lowered by 11%-28%. Rolling forward our valuation base year to FY25E, we derive a lower DCF-TP of MYR120.00 (WACC: 6.3%, LT growth: 2.5%).

Analyst:
Jade Tam
jade.tam@maybank-ib.com

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by Kenanga
Underperform – TP RM114.90

“Going Slow on Price Hikes"

NESTLE's 1HFY24 results disappointed due to weak domestic sales and higher marketing expenses, which also drove its 1HFY24 net profit lower by 24% YoY. The price hikes from 1 Jul 2024 may prompt further downtrading by consumers. We cut our FY24-25F net profit forecasts by 13% and 7%, respectively, trim our TP to RM114.85 (from RM115.00). Maintain UNDERPERFORM.

Analyst:
Cheow Ming Liang
cheowml@kenanga.com.my

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by HLIB
Sell – TP RM101.00

“Low quarterly showing"

Nestle’s registered 2Q24 core PAT of RM78.0m (-63% QoQ, -57% YoY) which was the lowest profit recorded in the past eight years. 1H24 results missed estimates at only 33%/38% of ours/consensus expectations. QoQ registered moderation from the high base as 1Q24 was boosted by the festive season. YoY revenue softness was owning to the decline in domestic sales (possible boycott effect) while bottom line took a hit from cost pressures. In view of the results shortfall, we cut our FY24/25 forecasts by -33%/-19% respectively. Downgrade to SELL (from Hold) with lower TP of RM101.00 (from RM122.50) based on DDM parameters (r: 3.3%, TG: 3.0%). Nestle trades at a relatively high valuation level of 47.8x FY24 PE in comparison to its holding-co in Switzerland (17.9x) FY24 PE - which now seems harder to justify in view of its earnings decline. Additionally, we reckon the boycott sentiment coupled with the cost pressure will continue to put a strain on its earnings moving forward.

Analyst:
Syifaa’ Mahsuri Ismail
syifaa@hlib.hongleong.com.my

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)
Research by CGS
Hold – TP RM119.50

“2Q24 results weak; better 2H24F ahead"

■ 2Q24 core net profit of RM94m (-48% yoy) brought 1H24 core net profit to RM300m (-20.6% yoy) at 38%/39% of our/Bloomberg consensus FY24 ests.
■ Generous cash handouts as part of the RON95 subsidy rationalisation initiative in 2H24 should spur revenue recovery in 2H24F, in our view.
■ Hold call maintained, as its rich 35.3x FY25F P/E valuation caps any upside from the improved demand outlook into FY25F.

Analyst:
Prem JEARAJASINGAM
prem.jearajasingam@cgsi.com

$NESTLE / 4707 (NESTLE (MALAYSIA) BERHAD)

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - EMPLOYEES PROVIDENT FUND BOARD

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - EMPLOYEES PROVIDENT FUND BOARD

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - EMPLOYEES PROVIDENT FUND BOARD

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - EMPLOYEES PROVIDENT FUND BOARD