FURTHER GROWTH: Photo shows a Nestle logo on one of the walls at one of its offices. Analysts believe that Nestle will likely see a rise in export sales in the coming years from the production line in Chembong, Negeri Sembilan. — Reuters photo
KUCHING: Nestle (Malaysia) Bhd is set to kick off its 100-year jubilee in the coming year with a number of promotional and marketing activities, set to further boost its already steady earnings.
“The company will be celebrating its 100-year-old birthday with a number of activities together with all Malaysians throughout next year, in conjunction with its 2012 theme ‘Always by your side’,” highlighted the research arm of Kenanga Investment Bank Bhd (Kenanga Research) in its research report.
Given the special celebration, the research house believed there would be some surprises from Nestle to reward its shareholders in the coming year.
The company’s new breakfast cereals factory in Chembong, Negeri Sembilan was also set to start with production next year.
“The 6,500-square metre factory will kick start the local production of the company’s cereal brands including Koko Krunch, Honey Stars, Cookie Crisp, Koko Krunch Duo and Milo for the first time in Malaysia,” addedd Kenanga Research, who noted that the products were currently being imported.
The production would not only cater for the domestic demand but also for exports to other countries in the region such as Singapore, Indonesia and Thailand, according to the research house. It believed Nestle was likely to see a rise in export sales in the coming years from this production line.
The research report maintained Nestle’s net earnings of RM438.1 million and RM457.8 million for financial year 2011 and financial year 2012 respectively, foreseeing new sales sales growth opportunities in the coming years.
“The company registered RM369.2 million in net earnings for the nine months 2011 and we believe our current estimate for financial year 2011 can easily be achieved by management,” the report further added.
As such, Kenanga Research marked Nestle as an attractive defensive play, seeing that its share price still rallied a strong 25 per cent in 2011. It then pegged a higher fair value of RM58 per share based on new assumptions in its discounted cash flow model.