KUALA LUMPUR: Challenges remain for Nestle (Malaysia) Bhd despite the expansion recorded for its topline from domestic and export markets recovery.
Hong Leong Investment Bank Bhd (HLIB) said the reduction in Covid-19 related expenses also helped to ease pressure on Nestle Malaysia's bottomline in light of rising raw material prices.
"Despite that, management flagged that the challenges remain with the elevated commodities and energy costs, rising inflation, Ukraine-Russia war and the weakening ringgit that further aggravated the situation.
"Overall, the group is steadfast in capturing the recovery by leveraging all opportunities to increase the reach of its core products while continuing to lead in product innovation," HLIB said.
Nestle registered core net profit of RM124.3 million in the third quarter of 2022, down 14.1 per cent year-on-year. This brought its nine-month's sum to RM516.1 million.
"This is broadly in line with our and consensus full year expectations, at 79.8 per cent and 79.4 per cent respectively.
"Its nine-month core net progit was arrived at after adjusting for RM28.6 million forex loss," HLIB said.
The firm maintained "Hold" on the stock with unchanged target price of RM121.60.