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Results Note � Nestle (ADD, maintain)
- Steady as ever Nestle's 1HFY14 results accounted for 51% of both our and consensus full-year estimates, and were in-line with expectations. Although Nestle�s 1HFY14 revenue grew by a 4.1% yoy was underpinned by: i) healthy domestic consumer spending and ii) continued marketing efforts, 1HFY14 net profit however dipped 7% yoy to RM302m owing to higher raw material costs and expenditure. Sequentially, 2QFY14 is typically a weaker quarter due to the absence of any major festive holidays (1QFY14: Chinese New Year festivities). The group has also announced its first single-tier interim DPS of 60 sen (1H13 DPS: 60 sen). We maintain our ADD recommendation with our unchanged DDM-derived TP of RM72.05. We believe that the weaker consumer sentiment landscape will not have a major impact on the company given its: i) strong market position and solid brand name and ii) household necessity-based products.
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