MONEY MASTER

Retain HOLD call with a higher target price (TP) of RM85.73 Highlights We attended Nestle’s 1Q17 briefing and came away feeling neutral on the company’s prospects going forward. Nestle anticipates half of revenue growth in FY17 will be driven by new product launches, in particular, the launch of new varieties of KitKat chocolates. We share management’s optimism on its new KitKat products, given: (1) its lion share in Malaysia’s chocolate product market which market share has grown from 14.4% in 2013 to 16.8% in 2016 (and overtook Cadbury as Malaysia’s most popular chocolate); (2) Majority of Malaysian consumers (two-third, according to a Nielsen report) prefer new and innovative products from brands that are familiar to them. Additionally, we believe that the launch of the Kit Kat confectionary store in Mid Valley in late-2016 (where consumers can customize KitKat chocolate bars with up to 10,000 combinations) will serve as its marketing base (apart from allowing N...

Upgrade from sell to HOLD recommendation with unchanged target price (TP) of RM1.55 Results In-line –  6M17 Net Profit of RM9.2m came in within our expectations but under consensus estimates, accounting for 43% and 34.1% of full year estimates, respectively. Dividends Interim dividend of 1 sen per share, ex-date 10 Jan 2017.  Highlights Qoq:  Net Profit fell 10.5% qoq to RM4.5m mainly due to KRR Malaysia operations incurring losses and weakening Ringgit (which increased Starbuck’s COGS). Yoy:  Net Profit fell 27.9% yoy for similar reasons. Starbucks  Malaysia’s operations continues to register growth in sales with higher same store sales growth (SSSG) of 1% qoq as well as contributions from opening of new stores (13 new stores in FY17) Despite this, the group experienced margin pressure due to the weakening of the ringgit as a large portion of their COGS are denominated in USD (Coffee beans, frappucino mix etc.) (USD MYR average...

Maintain HOLD with new target price (TP) of RM56.20 Dutch Lady’s 9M16 earnings of RM111.3m came in below expectation, making up only 68% of our full year forecast. Earnings fell 3.9% YTD mainly due to higher cost of sales and continued investments in support of the brand. Uptrend in milk prices putting pressure on company bottom line. We revised our FY16 and FY17 earnings forecast downwards to RM150.4m and RM163.7m respectively. Hold call retained with new target price of RM56.20. YTD earnings drop. Dutch Lady recorded a 9M16 revenue growth of 6.2% to RM776.1m due mainly to launch of the newly improved formula for Friso powdered milk which is specially targeted for children and introduction of Ready to Drink (RTD) UHT 125ml milk with Disney Marvel and Frozen character packaging. However, earnings dropped 3.9% YTD to RM111.3m from RM115.8m driven by i) higher costs of sales, and ii) greater advertising and promotion expenses in support of the brand as well as ...