KUALA LUMPUR (July 29): Nestlé (Malaysia) Bhd (KL:NESTLE) shares climbed to a more than two-month high on Wednesday, following the release of higher second-quarter earnings and dividends.
The counter rose RM4.32 or 4.61% to RM97.98, before ending the day at RM96.78 per share, still up 3.33%. At its last close, the group had a market capitalisation of RM22.69 billion.
CIMB Securities expects Nestlé to post stronger earnings in the second half of the year after a promising first six months of the year, driven by easing boycott pressures and resilient exports.
The house also expects Nestlé's margins to remain resilient, underpinned by selling price adjustments implemented in the first half of 2025 (1H2025), an improved product mix and operating leverage as volumes recover and ongoing operational efficiency and cost optimisation initiatives.
"Sequentially, however, we expect earnings to moderate half-on-half, as 1H is typically the stronger half of the year seasonally," it said in a note on Wednesday.
The research house said Nestlé recently announced its revenue rose 8.7% year-on-year (y-o-y) in the second quarter ended June 30, 2026 (2QFY2026), while reporting a 38.3% y-o-y increase in core net profit (CNP) to RM168.3 million within the same period.
Cumulatively, 1HFY2026 revenue grew 7.5% y-o-y, while CNP increased 18.6% y-o-y to RM348.6 million, accounting for 56.6% of its FY2026 forecast and 58.1% of Bloomberg consensus estimates, it added.
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Despite certain commodity price hikes due to conflicts in the Middle East, the group's key raw material outlook remains favourable, which should help offset broader input cost inflation and support margin resilience, CIMB Securities noted.
The company's key raw materials, coffee (down 9.6% year to date or YTD) and cocoa (down 14.8% YTD), continue to trade well below last year's elevated levels.
“The group also reiterated its commitment to operational efficiency and cost discipline to mitigate cost hikes while continuing to invest in brand-building activities and product innovation to drive sales,” the house said.
Downside risks identified by CIMB Securities include an escalation of geopolitical tensions, ringgit depreciation, and earlier-than-expected pricing actions that could trigger consumer downgrading.
The research house kept its bullish outlook on the group, reiterating its ‘buy’ call and target price of RM115.