KUALA LUMPUR (Feb 27): CIMB Equities Research is maintaining its Underperform call on Nestle Malaysia at RM55.20 with a target price of RM48.30.
It said on Monday that Nestle’s 4Q11 briefing revealed a surprise 5%-6% increase in Milo’s price.
“But we do not expect fatter margins from this as Nestle has to contend with higher raw material prices and a possible increase in advertising and promotion costs for its 100th anniversary.
“While we like Nestle’s defensive earnings and huge consumer base, its 27 times FY12 P/E is pricey. We reiterate our Underperform call (DCF-based target price), with the main potential derating catalyst being volatile commodity prices,” it said.
It said on Monday that Nestle’s 4Q11 briefing revealed a surprise 5%-6% increase in Milo’s price.
“But we do not expect fatter margins from this as Nestle has to contend with higher raw material prices and a possible increase in advertising and promotion costs for its 100th anniversary.
“While we like Nestle’s defensive earnings and huge consumer base, its 27 times FY12 P/E is pricey. We reiterate our Underperform call (DCF-based target price), with the main potential derating catalyst being volatile commodity prices,” it said.
