Period 4Q12/FY12
Actual vs. Expectations
The full year FY12 net profit (NP)
of RM505.4m was in line with expectations, making up 101.3% and 104.9% of the
street’s FY12E NP of RM499m and our RM482m respectively.
Dividends A
final single tier dividend of 155 sen was declared for the quarter, bringing
the total for FY12 to 210 sen. This payout was 10.5% and 16.7% higher than our
estimate and the previous FY11 dividend, translating into a dividend yield of
3.6%.
Key Result Highlights
QoQ,
sales was pretty much flattish while the NP was down by 21.9% to
RM99.5m, as expected. This is because of the higher investment in marketing and
promotion activities, which are usually spent in the 4Q.
YoY, the 4Q12 revenue
registered a marginal growth of 2.5%. This was mainly driven by domestic sales,
which helped to mitigate the decline in export sales due to a slower demand.
Nevertheless, the NP grew substantially by 32.2% YoY despite the higher marketing
expenses spent in conjunction with Nestle Malaysia’s 100-year celebration. The
NP margin improved by 2.0ppt due mainly to the easing commodities prices, lower
financing cost and lower tax bracket from reinvestment allowance claimed.
For the YTD, Nestle’s
NP breached the RM500m level and recorded a double-digit growth of 18.3% YoY backed
by a 7.3% growth in sales. Despite a slowdown in export sales, the domestic
demand was strong given the marketing and promotion activities carried out in conjunction
with Nestle Malaysia’s 100-year celebration. Together with a stable input cost
and internal cost savings initiatives under the umbrella of Nestle Continuous
Excellence program, the FY12 NP grew strongly with a 1.0ppt margin
expansion.
Outlook We
continue to see sales growth opportunities for the company driven by its
product innovations and marketing investments as well as its role on the global
stage as the Halal Centre of Excellence for Nestle Global.
The key launches of
the year included the new NESCAFE 3in1 Brown and Creamy, MILO mixes variances,
MAGGI MI Goreng with two flavours and two new NESTUM 3in1 products, all of
which were well received by the market and contributed positively to the group.
Change to Forecasts After some fine-tuning, we are tweaking our
FY13-14E NP higher by 7.4% and 11.8% from RM507m-RM527m to RM544m-RM589m.
Rating Maintain OUTPERFORM
Valuation We have
revised our TP on Nestle upward to RM73.30 (from RM72.10 previously) based on a
PER valuation of 31.6x (from 33.4x) over FY13 EPS of 232.1 sen (see overleaf
for details).
Risks More challenges ahead as there are a number of
uncertainties that are affecting the global economic growth and driving the
volatility in commodity prices.
Source: Kenanga
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