NESTLE (4707) : AffinHwang Capital maintains Add on Nestle (4707), raises target price to RM75
KUALA LUMPUR (Dec 15): AffinHwang Capital has research has maintained its “Add” rating on Nestle (M) Bhd at RM68.50 with a high target price of RM75 (from RM72.05) and said it was positive on Nestle’s prospects as the research house said it believed that the company will continue to register sturdy growth amidst a weaker consumer spending environment due to: i) resilient demand for its products, which are seen as basic necessities; ii) a strong brand name; and iii) solid fundamentals.
AffinHwang Capital said even though it was trimming its net-profit forecasts, it was lowering its beta assumption and increase terminal growth assumption to 3.5% (from 3%) for Nestlé,as its previous assumptions were too conservative.
“Thus, we increase our 12-month DDM-derived TP to RM75.00 (from RM72.05), valuing Nestlé at an implied 27.1x 2015 PE (+1SD of its 5-year historical mean).
“We believe this is fair in view of Nestlé’s: i) strong fundamentals and brand name; ii) solid earnings with a 10-year CAGR of 10.2%;and iii) strong product mix made up of nondiscretionary products, which should be more resistant to weaker consumer spending,” it said.
http://www.theedgemarkets.com
KUALA LUMPUR (Dec 15): AffinHwang Capital has research has maintained its “Add” rating on Nestle (M) Bhd at RM68.50 with a high target price of RM75 (from RM72.05) and said it was positive on Nestle’s prospects as the research house said it believed that the company will continue to register sturdy growth amidst a weaker consumer spending environment due to: i) resilient demand for its products, which are seen as basic necessities; ii) a strong brand name; and iii) solid fundamentals.
AffinHwang Capital said even though it was trimming its net-profit forecasts, it was lowering its beta assumption and increase terminal growth assumption to 3.5% (from 3%) for Nestlé,as its previous assumptions were too conservative.
“Thus, we increase our 12-month DDM-derived TP to RM75.00 (from RM72.05), valuing Nestlé at an implied 27.1x 2015 PE (+1SD of its 5-year historical mean).
“We believe this is fair in view of Nestlé’s: i) strong fundamentals and brand name; ii) solid earnings with a 10-year CAGR of 10.2%;and iii) strong product mix made up of nondiscretionary products, which should be more resistant to weaker consumer spending,” it said.
http://www.theedgemarkets.com
