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Monday, September 17, 2012

KLCI Stock - NESTLE / 4707 - 2012 Quarter 2


Company Info 
Market Capital (Capital Size)15,008,000,000 (Very Large)
Par ValueRM 1.00

My Analysis 
Forecast P/E now(64.0-1.9)/2.1316 = 29.13 (High)
Target Price49.03+1.9 = 50.93 (PE 23.0, EPS 2.1316, DPS 1.9)
DecisionNot interested unless profit manage to cover high dividend ratio
Comment
Revenue decreased 1.3% and was second consecutive quarter decreasing but still higher than preceding year corresponding quarter 10.5%, eps decreased 23.8% but higher than preceding year correspnding quarter 22.4%, cash generated from operating enough to cover all expenses, gross margin maintain very high, weaker liquidity ratio but still indicate financial strength is good, higher gearing ratio indicate well leverage to generate more income, all accounting of turnover period is good, all segment business still good
First Support Price61.0
Second Support Price54.5
Risk RatingHIGH

Research House
BIMB Target Price68.7 (2012-09-03)
CIMB Target Price55.2 (2012-09-03)
Kenanga Target Price67.5 (2012-09-03)
Maybank Target Price54.2 (2012-09-03)
OSK Target Price61.38 (2012-09-03)
MIDF Target Price59.52 (2012-09-04)
TA Target Price59.73 (2012-09-04)

Accounting Ratio 
Return on Equity75.60%
Dividend Yield2.97%
Gross Profit Margin33.75%
Operating Profit Margin12.96%
Net Profit Margin12.53%
Tax Rate16.33%
Asset Turnover2.3856
Net Asset Value Per Share2.81
Net Tangible Asset per share2.55
Price/Net Tangible Asset Per Share25.11
Cash Per Share0.34
Liquidity Current Ratio1.0068
Liquidity Quick Ratio0.5425
Liquidity Cash Ratio0.0824
Gearing Debt to Equity Ratio1.9707
Gearing Debt to Asset Ratio0.6634
Working capital per thousand Ringgit sale0.1%
Days to sell the inventory53
Days to collect the receivables35
Days to pay the payables93

Technical Analysis 
SMA 1063.212 (Downtrend)
SMA 2063.101 (Uptrend 67 days)
SMA 5060.868 (Uptrend)
SMA 10057.925 (Uptrend)
SMA 20055.962 (Uptrend)
MACD (26d/12d)0.588259 ( 0.053887 )
Signal (9)0.818617 ( 0.05759 )
MACD Histogram0.230358 (Bearish trend 6 days)
Bolinger Upper Band66.694
Bolinger Lower Band59.508

My notes based on 2012 quarter 2 report (number in '000):-
- Higher revenue and pbt than FY11Q2 mainly due to higher domestic sales but the export sales were flat for the quarter due to the lower demand experienced in some export markets

- The strong domestic sales were driven by the performance of the fast growing categories within the Group's portfolio, in particular Confectionery, Nestlé Liquid Drinks, Chilled Dairy and Ice Cream, which registered a robust double digit growth. The good sales results were due to the continuous investments in consumer communication

- Lower pbt than FY12Q1 largely due to the marketing and promotional activities which were typically more concentrated in the second quarter

- Estimate next 4Q eps after 2012 Q2 result announced = 640860*0.78/234500 = 2.1316, estimate PE on current price 64 = 29.13(DPS 1.9)
- Estimate next 4Q eps after 2012 Q1 result announced = 640860*0.75/234500 = 2.0497, estimate highest/lowest PE = 31.3/24.25 (DPS 1.8)
- Estimate next 4Q eps after 2011 Q4 result announced = 640860*0.64/234500 = 1.749, estimate highest/lowest PE = 31.56/30.3 (DPS 1.8)
- Estimate next 4Q eps after 2011 Q3 result announced = 0.4691*4 = 1.8764, estimate highest/lowest PE = 29.63/24.98 (DPS 1.75)
- Estimate next 4Q eps after 2011 Q1 result announced = 1.7283*1.2 = 2.074, estimate highest/lowest PE = 22.44/21.82 (DPS 1.65)
- Estimate next 4Q eps after 2010 Q4 result announced = 1.6691*0.8 = 1.3353, estimate highest/lowest PE = 36.21/31.94 (DPS 1.65)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.4827*4 = 1.9308, estimate highest/lowest PE = 23.05/20.99 (DPS 1.5)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.4271*4*1.1 = 1.8792, estimate highest/lowest PE = 23.15/20.22 (DPS 1.5)
- Estimate next 4Q eps after 2010 Q1 result announced = 1.56+0.1491+0.0357 = 1.7448(0.1491 from adjustment between 2009 Q1 eps and 2010 Q1 eps, 0.0357 from QbQ improvement adjustment), estimate highest/lowest PE = 23.21/18.52 (DPS 1.5)
- Estimate next 4Q eps after 2009 Q4 result announced = 1.56(around 4% from 1.5002), estimate highest/lowest PE = 22.12/20.54 (DPS 1.5)
- Estimate next 4Q eps after 2009 Q3 result announced = 1.4537, estimate highest/lowest PE = 23.06/21.12 (DPS 1.3)
- Estimate next 4Q eps after 2009 Q2 result announced = 1.4537, estimate highest/lowest PE = 23.65/21.78 (DPS 1.3)
- Estimate next 4Q eps after 2009 Q1 result announced = 1.5264, estimate highest/lowest PE = 21.42/17.82 (DPS 1.3)

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