In Seventh Heaven
Initiating Coverage
We initiate coverage on 7-Eleven Malaysia with BUY and a TP of MYR2.00, representing a 19% potential upside return. Our TP is based on a 28x FY15F P/E multiple which is a 17% premium over its regionally-listed peers’ average P/E of 24x. We are positive on its well-planned growth strategy and promising outlook for the convenience store industry in Malaysia and estimate a 3-year earnings CAGR of 29.1% over 2013-2016F.
Nestle (NESZ MK, NEUTRAL, TP: MYR67.00)
Moving Steadily Along
Results Review
Nestle’s 9M14 results were broadly in line, as its earnings comprised 76.2% and 75.9% of our and consensus estimates respectively. Maintain NEUTRAL and our DCF-based MYR67.00 TP, a 1.5% downside. Revenue ticked up by 1.4% YoY only, as weaker consumer sentiment affected domestic demand. At the same time, net profit slid down 2.0% YoY on higher marketing expenses.
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