KLCI Stock - NESTLE / 4707 - 2010 Quarter 1

Par Value: 1.00
Market Cap : 234500000*35 = 8,207,500,000 (Large)
NTA per share : (710201-61024)/234500 = 2.77
P/BV : 35/2.77 = 12.6354 (High)
Forecast P/E now : (35-1.5)/1.7448 = 19.2 (High)
ROE : 65.3% (High)
DY : 1.5/35*100 = 4.29% (Moderate)
Fixed Asset Turnover(3 year) : (2.0978+2.3625+1.9907)/3 = 2.1503 (High)
Liquidity Ratio : 866123/643044 = 1.3469 (Low)
Receivables Collection Period : (436156+384597)/2/(3780788/365) = 39 days (Good)
My Target Price : 31.41+1.5 = 32.91 (PE 18, EPS 1.7448, DPS 1.5)
My Decision : NOT BUY (unless price below 33)
My Comment : Revenue growing, good cash flow, high debt, navps increased
Technical Support Price : 34, 33
Risk Rating : LOW

My notes based on 2010 Quarter 1 report (number in '000):-
- For the first 3 months of 2010, the Group registered a turnover of 3.7% higher than the same period last year
- Exports representing 23% of total sales, achieved a double digit growth. This growth was mainly contributed by Nescafe products manufactured from the new lines invested last year and Non Dairy Creame
- The strengthening of the global economy and higher GDP growth forecasted by the Bank Negara, helped to improve local consumers' sentiments. To this effect, domestic sales further improved by 6.2% against prior quarter, and were higher by 0.7% against the same period last year
- Whilst the economic indicators showed a very positive sign for a strong recovery, this created higher demand for most of the major commodities, in particular Skimmed Mik Powder and Cocoa, the prices of which increased by more than 50% against the same period last year
- The above trend affected the Group's gross profit margin, which was 280 bps lower than the prior quarter. However, against the same period last year, the gross profit margin was higher by 160 bps, mainly due to better quality product mix and some exceptional items recorded in Q1 2009
- Operational expenses were exceptionally low in the first 3 months, mainly due to the timing of major marketing campaigns that are scheduled in the following quarters. This has allowed the Group to post a higher profit margin before tax of 16.7% and profit margin after tax of 13.6%
- Against the 4th quarter, the operational expenses were exceptionally low in the first 3 months, mainly due to the timing of major marketing campaigns that are scheduled in the following quarters. This has allowed the Group to post a higher profit margin before tax of 16.7% and profit margin after tax of 13.6%
- 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 PE on current price 35 = 19.2(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)

NESTLE latest news from The Edge (English)