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sectoranalyst Publish date: Wed, 28 Feb 2024, 11:37 AM Review Nestlé (Malaysia) Berhad’s (Nestlé) FY23 core earnings of RM783.1mn met our expectations at 102% but beat consensus full-year estimates at 110%, respectively. YoY, For FY23, its revenue rose 5.8% to RM7.1bn, chiefly driven by higher domestic sales during year-end. Core PBT increased 9.8% to RM1.0bn while core net profit hiked 16.3% YoY to RM783.1mn, thanks to the effective internal cost controls which mitigated the impact of higher commodity cost, and unfavourable exchange rates (Effective tax rate - 2.9pts to 24.9% in FY23). QoQ, 4QFY23 revenue dropped 4.9% to RM1.7bn while PBT stood at RM176.7mn, reflecting a 26.3% QoQ decline. The decrease was mainly attributed to higher OPEX and the recognition of impairment losses for some assets in this quarter. The group declared a final dividend of 128.0sen/share (4QFY22: 122.0sen/share), bringing YTD total dividend to 268.0sen/share (FY22: 262.0sen/share) higher than the previous corresponding quarter. Impact No change to our earnings, pending guidance at analyst briefing today. Outlook Moving forward, we expect Nestlé to improve it GP margin back to prepandemic levels (around 34% whereas latest GP margin in 4QFY24 stood at 32.1%) attribute to the easing in raw materials price and effective cost measures. Valuation Upgrade to Hold with unchanged target price of RM132.60/share based on DDM valuation (k: 6.4%; g: 3.0%) due to the recent weakening in share price. Source: TA Research - 28 Feb 2024
Nestlé (Malaysia) Berhad - No Surprises in FY23
ReplyDeletesectoranalyst
Publish date: Wed, 28 Feb 2024, 11:37 AM
Review
Nestlé (Malaysia) Berhad’s (Nestlé) FY23 core earnings of RM783.1mn met our expectations at 102% but beat consensus full-year estimates at 110%, respectively.
YoY, For FY23, its revenue rose 5.8% to RM7.1bn, chiefly driven by higher domestic sales during year-end. Core PBT increased 9.8% to RM1.0bn while core net profit hiked 16.3% YoY to RM783.1mn, thanks to the effective internal cost controls which mitigated the impact of higher commodity cost, and unfavourable exchange rates (Effective tax rate - 2.9pts to 24.9% in FY23).
QoQ, 4QFY23 revenue dropped 4.9% to RM1.7bn while PBT stood at RM176.7mn, reflecting a 26.3% QoQ decline. The decrease was mainly attributed to higher OPEX and the recognition of impairment losses for some assets in this quarter.
The group declared a final dividend of 128.0sen/share (4QFY22: 122.0sen/share), bringing YTD total dividend to 268.0sen/share (FY22: 262.0sen/share) higher than the previous corresponding quarter.
Impact
No change to our earnings, pending guidance at analyst briefing today.
Outlook
Moving forward, we expect Nestlé to improve it GP margin back to prepandemic levels (around 34% whereas latest GP margin in 4QFY24 stood at 32.1%) attribute to the easing in raw materials price and effective cost measures.
Valuation
Upgrade to Hold with unchanged target price of RM132.60/share based on DDM valuation (k: 6.4%; g: 3.0%) due to the recent weakening in share price.
Source: TA Research - 28 Feb 2024