Market Insights: Nestlé’s Stock Plunge – Opportunity or Risk?


Thu, Mar 20, 2025


Nestlé (NESTLE) is often regarded as the "King of Stocks" in Malaysia, with its stock price historically staying above RM100.

However, recently, Nestlé's stock price has fallen below RM100 and even below RM70. Compared to its peak of RM150, the price has dropped by about 50%.

Faced with this situation, investors are asking: Is this a good time to invest in Nestlé, or is there a potential risk? This article analyzes brand value, profitability, dividend yield, and valuation.

Brand & Profitability

For general investors, a good company usually has the following three characteristics:

Strong brand recognition – Nestlé owns well-known brands such as Milo, Nescafe, Maggi, and KitKat.


Stable profitability – Nestlé maintains annual profits consistently.
Regular dividend payments – Nestlé regularly distributes dividends to shareholders.


However, a deeper analysis reveals that although Nestlé's earnings are stable, they lack growth. Financial data shows that annual profits have remained around RM650 million for over a decade, barely exceeding RM700 million.

More importantly, the 2024 financial report shows a significant decline in revenue and profit margin.


****** Net profit fell from RM600 million to RM416 million, with a profit margin dropping to 6.7%. *******

This is a key factor behind the stock price dropping below RM100.

Dividend Yield Misconception
Nestlé has a strong dividend history, distributing ******* over RM2 per share annually. ************

The company ***** pays dividends 3 times a year, in February, July, and October.

*********

Year	Dividend Breakdown	Total Dividend (RM)
2025	(0.7400)	0.7400
2024	(0.3500 + 0.7000 + 1.2800)	2.3300
2023	(0.7000 + 0.7000 + 1.2200)	2.6200
2022	(0.7000 + 0.7000 + 1.0200)	2.4200
2021	(0.7000 + 0.7000 + 0.9200)	2.3200
2020	(0.7000 + 0.7000 + 1.4000)	2.8000
2019	(0.7000 + 0.7000 + 1.4000)	2.8000
2018	(0.7000 + 0.7000 + 1.3500)	2.7500
2017	(0.7000 + 0.7000 + 1.3000)	2.7000

However, considering that the stock price was above RM100, the dividend yield was actually less than 2%.

By comparison, fixed deposits offer an interest rate of more than 3%, making Nestlé's dividend appeal relatively low.

Is the Price-to-Earnings (P/E) Ratio Reasonable?
A commonly used valuation metric is the Price-to-Earnings (P/E) ratio, calculated as:

P/E Ratio = Current Stock Price / Earnings Per Share (EPS)

P/E 10-20: Reasonable range (5%-10% return)
P/E >20: Overvalued, return below 5%
P/E <10: Undervalued, return above 10%


Over the past five years, Nestlé’s average P/E ratio has been around 50x, meaning investors would take 50 years to recover their investment, with an annual return of just 2%. Even after the stock price dropped from RM150 to RM70, the current P/E ratio remains well above the ideal level of 20x.

For Nestlé’s P/E ratio to reach 20x, the stock price would need to fall further to RM35.

Why Is Nestlé’s Profit Growth Limited?
Nestlé Malaysia is not an independent company but a subsidiary of Nestlé Switzerland, which owns 72.61% of Nestlé Malaysia’s shares.

The parent company operates Nestlé Malaysia as a "cash cow" model, meaning:

Limited growth potential – Nestlé primarily serves the local Malaysian market, with little room for expansion.

Profit repatriation – Earnings are mainly distributed as dividends to the parent company rather than reinvested for growth.

Lack of global expansion – Nestlé Malaysia does not focus on global expansion, with limited exports.

Since the parent company prioritizes stable income over business expansion, Nestlé Malaysia struggles to achieve long-term growth.

Opportunity or Risk?
Nestlé’s stock decline could indicate two scenarios:

Short-term correction – an investment opportunity: If the profit decline is temporary, the stock price may recover, allowing investors to buy at a lower price and benefit from higher dividend yields.

Long-term downtrend – a risk: If the profit decline is a long-term trend, Nestlé’s competitiveness and valuation may continue to fall, leading to further stock price declines.

Therefore, investors should closely analyze the real reasons behind Nestlé’s declining earnings to determine whether this is a temporary fluctuation or a long-term issue.

Conclusion



Nestlé is a well-known Malaysian company with strong brand recognition and stable profits. However, it faces challenges such as stagnant growth, low dividend yields, and high valuation.

The recent sharp stock price decline could be an investment opportunity or the beginning of a long-term downtrend. Investors should carefully assess the causes of Nestlé’s profit decline before making investment decisions.

This post has been edited by plouffle0789: Mar 21 2025, 10:29 AM

Market Insights: Nestlé’s Stock Plunge – Opportunity or Risk?


Thu, Mar 20, 2025


Nestlé (NESTLE) is often regarded as the "King of Stocks" in Malaysia, with its stock price historically staying above RM100.

However, recently, Nestlé's stock price has fallen below RM100 and even below RM70. Compared to its peak of RM150, the price has dropped by about 50%.

Faced with this situation, investors are asking: Is this a good time to invest in Nestlé, or is there a potential risk? This article analyzes brand value, profitability, dividend yield, and valuation.

Brand & Profitability

For general investors, a good company usually has the following three characteristics:

Strong brand recognition – Nestlé owns well-known brands such as Milo, Nescafe, Maggi, and KitKat.


Stable profitability – Nestlé maintains annual profits consistently.
Regular dividend payments – Nestlé regularly distributes dividends to shareholders.


However, a deeper analysis reveals that although Nestlé's earnings are stable, they lack growth. Financial data shows that annual profits have remained around RM650 million for over a decade, barely exceeding RM700 million.

More importantly, the 2024 financial report shows a significant decline in revenue and profit margin.


****** Net profit fell from RM600 million to RM416 million, with a profit margin dropping to 6.7%. *******

This is a key factor behind the stock price dropping below RM100.

Dividend Yield Misconception
Nestlé has a strong dividend history, distributing ******* over RM2 per share annually. ************

The company ***** pays dividends 3 times a year, in February, July, and October.

*********

Year	Dividend Breakdown	Total Dividend (RM)
2025	(0.7400)	0.7400
2024	(0.3500 + 0.7000 + 1.2800)	2.3300
2023	(0.7000 + 0.7000 + 1.2200)	2.6200
2022	(0.7000 + 0.7000 + 1.0200)	2.4200
2021	(0.7000 + 0.7000 + 0.9200)	2.3200
2020	(0.7000 + 0.7000 + 1.4000)	2.8000
2019	(0.7000 + 0.7000 + 1.4000)	2.8000
2018	(0.7000 + 0.7000 + 1.3500)	2.7500
2017	(0.7000 + 0.7000 + 1.3000)	2.7000

However, considering that the stock price was above RM100, the dividend yield was actually less than 2%.

By comparison, fixed deposits offer an interest rate of more than 3%, making Nestlé's dividend appeal relatively low.

Is the Price-to-Earnings (P/E) Ratio Reasonable?
A commonly used valuation metric is the Price-to-Earnings (P/E) ratio, calculated as:

P/E Ratio = Current Stock Price / Earnings Per Share (EPS)

P/E 10-20: Reasonable range (5%-10% return)
P/E >20: Overvalued, return below 5%
P/E <10: Undervalued, return above 10%


Over the past five years, Nestlé’s average P/E ratio has been around 50x, meaning investors would take 50 years to recover their investment, with an annual return of just 2%. Even after the stock price dropped from RM150 to RM70, the current P/E ratio remains well above the ideal level of 20x.

For Nestlé’s P/E ratio to reach 20x, the stock price would need to fall further to RM35.

Why Is Nestlé’s Profit Growth Limited?
Nestlé Malaysia is not an independent company but a subsidiary of Nestlé Switzerland, which owns 72.61% of Nestlé Malaysia’s shares.

The parent company operates Nestlé Malaysia as a "cash cow" model, meaning:

Limited growth potential – Nestlé primarily serves the local Malaysian market, with little room for expansion.

Profit repatriation – Earnings are mainly distributed as dividends to the parent company rather than reinvested for growth.

Lack of global expansion – Nestlé Malaysia does not focus on global expansion, with limited exports.

Since the parent company prioritizes stable income over business expansion, Nestlé Malaysia struggles to achieve long-term growth.

Opportunity or Risk?
Nestlé’s stock decline could indicate two scenarios:

Short-term correction – an investment opportunity: If the profit decline is temporary, the stock price may recover, allowing investors to buy at a lower price and benefit from higher dividend yields.

Long-term downtrend – a risk: If the profit decline is a long-term trend, Nestlé’s competitiveness and valuation may continue to fall, leading to further stock price declines.

Therefore, investors should closely analyze the real reasons behind Nestlé’s declining earnings to determine whether this is a temporary fluctuation or a long-term issue.

Conclusion



Nestlé is a well-known Malaysian company with strong brand recognition and stable profits. However, it faces challenges such as stagnant growth, low dividend yields, and high valuation.

The recent sharp stock price decline could be an investment opportunity or the beginning of a long-term downtrend. Investors should carefully assess the causes of Nestlé’s profit decline before making investment decisions.

Nestle Malaysia has been artificially push up to astronomical price. Now going back to its fair price of 35.

NESTLE (MALAYSIA) BERHAD ,4707

Main Market : Food & Beverages

63.800 ↑
1.560 (2.5%)


Now RM 63.80 leh

Yup... Its getting there

Metric	Value
**Average Volume**	80.25K
**Market Value**	RM14.6B
**Shares Outstanding**	N/A
**EPS (TTM)**	RM2.23
**P/E Ratio (TTM)**	28.29
**Dividend Yield**	2.84%
**Latest Dividend**	RM0.35
**Ex-Dividend Date**	Nov 20, 2024
**Beta**	0.36
**Short Interest**	N/A
**Short Interest Change**	N/A
**Percent of Float**	N/A

the drop to 30 is within the realm of possibility...based on muh macroconspironomics...

economy is bad. M40 got hit very hard

Nestle Malaysia holds groundbreaking for RM250mil logistics hub in Port Klang



Friday, 21 Mar 2025

12:03 PM

Juan Aranols, CEO of Nestlé (Malaysia) Bhd (third from right); and Chan Sway Wah, managing director of Malconrep Depot (third from left), commemorate the groundbreaking ceremony for Nestlé Malaysia’s world-class logistics hub in Port Klang. They are flanked by (from left) Raja Nurmaria Murni Raja Nur Azmi, executive director of group corporate affairs, Malaysia and Singapore;


Xolile White, executive director of technical and production; Luca Fichera, vice-president of supply chain and business services, Nestlé Asia, Oceania, and Africa; and Anurag Dwivedi, executive director of supply chain.





KUALA LUMPUR: Nestle (Malaysia) Bhd has held a groundbreaking ceremony for its RM250mil integrated logistics hub in Port Klang, which forms part of the consumer group's plan to enhance supply chain efficiency and sustainability.

In a statement, Nestle Malaysia said the hub, which is expected to be fully operational by 1Q26, will facilitate the export of products and well as the sourcing of imported raw materials.


Nestle Malaysia is partnering Malconrep Depot (M) Sdn Bhd, a Malaysian-owned logistics company, in the development of the facility.

“The confidence that Nestlé Malaysia has placed in us allows for long-term planning and investment in smart warehousing infrastructure and a greener, more efficient logistics ecosystem,” said Malconrep Depot managing director Chan Sway Wah.

ADVERTISING

The hub will feature a modern warehouse and a container yard, leveraging economies of scale and digitalisation to optimise operations and better serve Nestlé’s expanding customer base.

It will incorporate cutting-edge technology and sustainable innovations, contributing also to reduce the environmental impact of Nestlé’s logistic operations.

"This exciting step forward for Nestlé Malaysia, in addition to driving future growth, underscores also our commitment to invest in Malaysia and marks the creation of a world-class logistics hub that will revolutionise our operations through advanced technology," said Nestle Malaysia CEO Juan Aranols.





This news is good ????

Or maybe there are another good news to Nestle BHD 4707?

No good news leverag economic of scale is risky business.

this is wayang kulit.... 2026 oredi will be in midst of full blown recession or stagflation...
nestle has always been a nice to have things to buy... but it's not necessity...

to me... it will continue to falll into oblivionz....

Now the market has too many cheap products, such as local brands and homemade brands.

Leveraging economies of scale:



This refers to the strategy whereby companies reduce the cost per unit by producing on a large scale.



As production increases, fixed costs are spread over a larger number of products, thereby lowering the cost per unit.

High-risk business:


This implies that although leveraging economies of scale can theoretically offer cost advantages, in practice it may face numerous risks.


These risks include unstable market demand, financial pressure, management challenges, quality control issues, and more.


If market conditions change, a strategy that relies heavily on mass production could result in even greater losses.


Am I correct?

If you own stocks in a processed food company, you better sell. Junk food companies like Nestle, Coca Cola, PepsiCo, Mondelez, etc gonna take a big hit for the next 4 years.

I never buy base on brand but base on product

Same I never have favourite band, but only favourite music.

Interested to know why

People start eating healthy?

The only I heard about is the junk food advert ban?

This post has been edited by B0ss_ku: Mar 24 2025, 12:01 AM

lol they have so many brands, they have to defend each brand from competition. competition is so intense they going after your every single product.

i dont even buy nestle anymore, even the ice cream i buy f&n (rarely eat). each generation changes, they no longer buy your staple garbage anymore if they know better alternatives.

Over valued share.

Then don’t eat haagen dazz also ok-

Lol- alot of brands behind boss is nestle-

Control 40% of the market- u have no idea that burger king / kfc all also got use Nestlé products.

Ur mamak- ur malay food - your western dish- heck even your local Chinese restaurant-

All contributes to the revenue-

Just becoz nestle don’t advertise them doesn’t mean they do t have a hand .

they own everything, even the supplies for other brands