Friday, August 27, 2010

OSK Research ups target price for Nestle to RM38.53

KUALA LUMPUR: OSK Research has raised its target price for NESTLE (M) BHD [] to RM38.53 from RM31.49 previously, and maintained its neutral recommendation on the stock.

In a note on Friday, Aug 27, OSK Research said Nestle's 1HFY10 earnings were above its own and consensus estimates, making up 61.8% of the research house's full-year forecast.

It said Nestle's year-on-year earnings swelled 28.6% on the back of improving export sales, mainly from its new coffee and non-dairy creamer lines in Shah Alam.

"Earnings before interest and tax margins rose from 12.9% to 14.5%. Meanwhile, quarter-on-quarter earnings declined 27.8% as marketing expenses rose during the quarter, with new products such as Nescaf'' Ipoh White Coffee and Maggi whole wheat noodles being launched.

"We revise upwards our earnings forecasts for FY11 and target price to RM38.53 from RM31.49. Maintain Neutral," it said.

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