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Nestle Lanka [NEST]: SELL

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  • Nestle Lanka [NEST]: SELL

    NEST reported a 1Q CY19 recurring net profit of LKR 573mn (-39.3% YoY), driven by a 7.7% YoY decline in revenues and EBIT margins of 10.3%, down 2.8pp YoY. Management noted that while lower demand affected the topline, raw material cost increases coupled with the impact from currency depreciation and operating leverage, hurt margins. Commenting on demand post Easter attacks, NEST noted that while there was panic buying on the first week, replenishments, particularly at the general trade, have been slow. While 2Q CY19E will be hard hit, we expect CY19E to be a challenging year for NEST. With downward revisions to our estimates, our TP goes to LKR 1,300/share (previously LKR 1,612/share). With a DPS of LKR 41.00, we derive a TSR of -15.3%, and revise our rating from a HOLD to a SELL.
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  • #2
    Thanks Prasa.
    Any research on CTC?
    Appreciate if you can share in case yo have it.
    "The best values today are often found in the stocks that were once hot and have since gone cold"

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