Nestle (Malaysia)'s Margins May Hold up Despite El Nino Cost Risks

Dow Jones10-28

0115 GMT - The impact on Nestle (Malaysia)'s costs may only emerge gradually in 2027, despite the adverse effects of El Nino on spot raw material prices, Maybank IB analyst Jade Tam says in a note. Lower cocoa and coffee prices are expected to continue supporting profit margins in coming quarters, while the company's advance purchasing strategy could delay the impact of higher raw material costs, she reckons. Higher government cash aid may also help support sales and partly offset higher costs next year, she adds. Tam raises Nestle's 2026-2028 earnings estimates by 15%, 5% and 2%, respectively, after 3Q earnings beat. Maybank raises Nestle's target price to 122.80 ringgit from 120.00 ringgit, while maintaining a buy rating. Shares are 2.5% higher at 96.66 ringgit.

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