Skip to main content

Featured Post

Market Daily Report: Bursa Malaysia Ends Higher In Line With Most Regional Markets

KUALA LUMPUR, Sept 20 (Bernama) -- Bursa Malaysia ended higher on Friday in line with most Asian markets, mirroring gains from Wall Street, where investors welcomed the US Federal Reserve's substantial interest rate cut. The FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 3.17 points, or 0.19 per cent, to 1,668.82 at the close from Thursday's close of 1,665.65. It opened 5.03 points higher at 1,670.68, trading between 1,668.48 and 1,674.04 throughout the session. In the broader market, gainers outpaced decliners 732 to 468, while 465 counters were unchanged, 850 untraded and 32 suspended. Turnover swelled to 4.19 billion units worth RM5.97 billion, from Thursday's 3.99 billion units worth RM4.08 billion. UOB Kay Hian Wealth Advisors head of investment research, Mohd Sedek Jantan, noted the FBM KLCI's gains were led by utilities, logistics, and banking stocks, reflecting improved market sentiment. Additiona
Post a Comment

Nestlé Malaysia Shares Fall to Lowest in Over Three Months After Results

 

Shares in Nestlé (Malaysia) Bhd (KL) dropped to their lowest point in over three months following weaker-than-expected quarterly results.

On Friday, Nestlé shares fell by RM3.10 or 2.5% to RM118.90, marking their lowest since April 4. The stock traded at RM119 at 9.15am, giving the company a market capitalisation of nearly RM28 billion on Bursa Malaysia. At least two research houses downgraded their recommendations for the stock to “sell.”

The first-half net profit of RM289 million fell short of expectations, accounting for only 37% of the consensus full-year forecast. This led analysts to reduce their earnings forecasts.

“We reckon [that] Nestlé will continue to face challenges with uncertainty from volatility in commodity [prices], coupled with weakening currency,” said Hong Leong Investment Bank (HLIB). “Sales will take time to normalise, considering the still intense Israel-Gaza conflict that is unfortunately seeing no signs of abating.”

HLIB downgraded the stock to “sell,” citing its “relatively high valuation” at nearly 48 times forward earnings, compared to its Swiss parent company’s 18 times, which is harder to justify amid declining earnings.

Nestlé shares have fallen over 8% from this year’s peak in May. Despite selling food and beverage staples, Nestlé has performed better than its peers in the consumer sector selling non-essential products.

Nestlé, Starbucks, and McDonald’s have faced intense boycotts in Malaysia due to their perceived links to Israel amid the ongoing Gaza conflict.

Among 13 research houses, nine have the stock on a “hold” call, three on “sell,” and only one recommends “buy.” The consensus 12-month target price is RM120.87, according to Bloomberg.

Following the latest cuts, Nestlé is expected to make a net profit of RM777 million for 2024.

Nestlé SA, the parent company, has reduced its full-year sales growth target to 3% from 4%, while slowing price hikes. Kenanga Investment Bank (Kenanga IB) expects Nestlé Malaysia to follow suit and has the stock on an “underperform” call.

Previously, Nestlé Malaysia raised prices for at least 20 products to protect margins against higher commodity prices.

Despite its strong brand and diversified product range with inelastic demand, “recent experience has shown that it is vulnerable to downtrading by consumers, amid sustained elevated inflation,” Kenanga IB warned.

Key Takeaways:

  • Nestlé Malaysia shares fell to RM118.90, the lowest in over three months.
  • First-half net profit of RM289 million missed expectations, leading to downgrades.
  • Challenges include commodity price volatility, weakening currency, and the Israel-Gaza conflict.
  • The stock has a high valuation at 48 times forward earnings.
  • Intense boycotts in Malaysia due to perceived links to Israel.
  • Consensus 12-month target price is RM120.87.
  • Expected net profit for 2024 is RM777 million.
  • Price hikes have been implemented to protect margins.
  • Vulnerability to consumer downtrading amid elevated inflation.
Labels:

Comments

Post a Comment

Popular posts from this blog

INTC Share Watch and News

Stock Info Market Monitor Company Profile Intel Corporation designs, manufactures, and sells integrated circuits for computing and communications industries worldwide. It offers microprocessor products used in notebooks, netbooks, desktops, servers, workstations, storage products, embedded applications, communications products, consumer electronics devices, and handhelds. The company also offers system on chip products that integrate its core processing functionalities with other system components, such as graphics, audio, and video, onto a single chip. It also provides chipset products that send data between the microprocessor and input, display, and storage devices, such as keyboard, mouse, monitor, hard drive, and CD or DVD drives; motherboards that has connectors for attaching devices to the bus, and products designed for desktop, server, and workstation platforms; and wired and wireless connectivity products, including network adapters and embedded wireless cards used to translat
1 comment
Read more

Analysts See Asset Resilience of Bank of Chengdu Benefiting Hong Leong Bank

Analysts predict that the asset quality of Bank of Chengdu, in which Hong Leong Bank Bhd holds a 19.76% stake, will remain robust due to its strict risk management policies and proactive measures. Key Takeaways: Strong Risk Management Practices : According to CIMB, Bank of Chengdu has adopted a conservative risk culture, performing thorough assessments of location, developer reputation, project viability, and management integrity before financing property projects. The bank closely monitors early warning signals like construction progress, sales progress, budget overruns, and fund usage by developers to mitigate potential risks. Proactive Measures Against Property Slowdown : The bank's precautionary measures allowed it to reduce exposure to problematic property loans and exit risky loans before China's property market slowdown. This conservative approach is expected to benefit Hong Leong Bank by minimizing potential asset quality concerns. Continued Optimism and Buy Recommendat
Post a Comment
Read more

Investors Keep Buying US Junk Debt Despite Weak Protections

  When US-based construction material supplier Wilsonart issued a junk bond to raise US$500 million (RM2.13 billion) for an acquisition this summer, a research firm warned potential investors about the bond's weak protections. The bond’s covenants could allow the company to move valuable assets to another entity and raise more money, potentially disadvantaging bond investors, according to Covenant Review , a research firm. This warning comes amid growing concerns in credit markets as more companies engage in practices like "liability management exercises," where they borrow more against the same assets. These practices, often favoring some creditors over others, have been dubbed "creditor-on-creditor violence," prompting some creditors to unite to protect their interests. Despite the warnings, investors eagerly purchased Wilsonart's offering, underscoring a paradox in US credit markets. While investors face the consequences of weak covenants, they continu
Post a Comment
Read more