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The Behind-the-Scenes Story on Motley Fool Singapore’s Biggest

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2 The Motley Fool Special Report fool.sg

All information is provided exclusively by The Motley Fool Singapore Pte Ltd, a licenced investment advisory research provider (MAS Financial Adviser’s Licence No. FA100056-1). Any information, commentary, recommendations or statements of opinion provided here are for general information purposes only. It is not intended to be personalised investment advice or a solicitation for the purchase or sale of securities. Before purchasing any discussed securities, please be sure actions are in line with your investment objectives, financial situation and particular needs. International investors may be subject to additional risks arising from currency fluctuations and/ or local taxes or restrictions. The information contained in this publication are obtained from, or based upon publicly available sources that we believe to reliable, but we make no warranty as to their accuracy or usefulness of the information provided, and accepts no liability for losses incurred by readers using research. Recommendations and opinions are subject to change without notice. Please remember that investments can go up and down, including the possibility a stock could lose all of its value. Past performance is not indicative of future results.

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All performance information was current as of the date each article was originally published, which we’ve disclosed throughout.

Disclosure: As of 4 April 2018, Chong Ser Jing owned shares of Dairy Farm International. Chin Hui Leong owned shares of CapitaLand Mall Trust, Dairy Farm International and Singapore Exchange. David Kuo owned shares of CapitaLand Mall Trust.

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Table of Contents

• Introduction

• Section 1: Our “Buy” Recommendation on Nestle Malaysia

• Section 2: Our Coverage of Nestle Malaysia’s First Quarterly Earnings Report as a Stock Advisor Gold Recommendation

• Section 3: Our Coverage of Nestle Malaysia’s Second Quarterly Earnings Report as a Recommendation

• Section 4: Our Coverage of Nestle Malaysia’s Third Quarterly Earnings Report as a Recommendation

• Section 5: Our Coverage of Nestle Malaysia’s Fourth Quarterly Earnings Report as a Recommendation

• Section 6: Our Coverage of Nestle Malaysia’s Fifth Quarterly Earnings Report as a Recommendation

• Section 7: Our Decision to Put Nestle Malaysia on “Hold”

• Section 8: Our Coverage of Nestle Malaysia’s Sixth Quarterly Earnings Report as a Recommendation

• Section 9: Our Decision to “Sell” Nestle Malaysia


Nearly two years ago, back in May 2016, Motley Fool Singapore launched our first-ever premium stock recommendation service – Stock Advisor Gold.

When we launched Stock Advisor Gold, our hope was to build an exclusive, close-knit club for investors here in Singapore… and one that of course also delivers excellent investing recommendations and advice.

The exclusive access we’d dreamed about at the launch of Stock Advisor Gold has gone exactly as we’d hoped – if not better. We’ve taken members on exclusive site visits to Super Group’s factory (before the company was taken private – clinching a 50% profit for us!), the offices of Singapore Exchange (SGX: S68), and the Funan showsuite of CapitaLand Mall Trust (SGX: C38U). We also organised member-exclusive pop-up events to share our views about important events that affected the financial markets, such as Brexit’s unexpected occurrence, or when it became increasingly clear that the US would be increasing interest rates.

Then, there’s the crown jewel of Stock Advisor Gold: Our annual investing conference, FoolFest.

In 2016, we brought together a stellar group of speakers, including Hugh Young, the Managing Director of Aberdeen Asset Management Asia; Peng T Ong, arguably one of Singapore’s most successful venture capitalists; and Gabriel Yap, a renowned local investor.

FoolFest 2017 featured another excellent line-up of speakers, such as Wilson Tan, the Deputy CEO of CapitaLand Mall Asia; Lim Chung Chun, the CEO and Founder of iFAST Corporation (SGX: AIY); and Nicki Ramsay, Founder and CEO of CardUp.

And of course, both FoolFest 2016 and 2017 also featured the entire investing team at Stock Advisor Gold – plus food!

But we know that for most members, the core of Stock Advisor Gold is applying The Motley Fool’s long-term, business-focused investment approach to the Singaporean market.

Which is why our investing team provides members with two formal recommendations each month (one domestic and one international), as well as our full “Watch List” of stocks, discussion forums to share ideas and talk stocks, and our exclusive Gold Insider podcast, where the team talks about what’s going on in the financial markets of Singapore and elsewhere around the world.

We custom-built this service based on feedback and ideas from Fool Singapore readers and local investors, and it’s truly been an amazing first 23 months for the service. Despite blistering 14.9% returns from the market at large since the service’s inception, as of 22 March 2018, Stock Advisor Gold’s average recommendation is easily outpacing it with a whopping 24.9% return.

Although it’s never wise to measure investment performance by short-term increments (and yes – even two years is short-term to us!), we’re truly pleased with the long-term prospects of all our active recommendations.

Now, to commemorate Stock Advisor Gold’s upcoming two-year anniversary and the market-beating success our members have seen so far, we’ve decided to compile this special behind-the-scenes report to highlight the journey we had in our service’s biggest realised winner to-date, the consumer food products group, Nestle Malaysia Berhad (KLSE: 4707.KL).

Stock Advisor Gold recommended members invest in Nestle Malaysia on 25 August 2016. Around 19 months later – on 13 March 2018 – we issued a “Sell” recommendation on the company after its stock price had climbed by 87.5% from where we had recommended it.

The Motley Fool is well known around the world for our focus on long-term investing. And while we gravitate towards Warren Buffett’s quip that “our favourite holding period is forever,” we do recognize that sometimes a company has fulfilled the original purpose we intended for it… or has perhaps deviated from that initial course.

So we hope that you’ll find this special “backstage” look at our Nestle Malaysia recommendation from start to finish to be a validation of our Foolish investment principles of business-focused, “buy-to-hold” investing.

What follows is the entirety of the Nestle Malaysia-focused write-ups, articles, and commentary that we published exclusively inside Stock Advisor Gold. From our comprehensive initial “Buy” recommendation, to the “Sell” decision that we recently made to lock in a sweet 87.5% gain in 19 months.

Without further ado, pour yourself a cup of Milo (it’s made by Nestle!) and board the time machine with us, to travel back to 25 August 2016…

Introduction


Headquarters Malaysia

Website nestle.com.my

Industry Consumer

Volatility Low (5-Yr Beta: 0.09)

Market Cap RM18,500.00

Cash/Debt RM 20.60 / RM 360.10

Revenue (TTM) RM 4,968.00

Earnings (TTM) RM 688.40

Total Inside Ownership 72.6%

Recent Price RM 78.70

Yield 3.1%

TTM = Trailing 12 MonthsDollar amounts in millions except recent price.

Data as of 25/08/2016

Nestle Malaysia (KLSE: 4707.KL) has been listed on Bursa Malaysia since 1989. The company has grown consistently since its listing to become one of the largest consumer companies in Malaysia.

Nestle Malaysia manufactures and distributes a wide range of food & beverage products such as milk, cereals, coffee, ice cream, chocolates, and more. It even has health science mixture products in its portfolio.

The company’s products are easily spotted in most retailers in Malaysia such as hypermarkets, supermarkets, and even smaller mom-and-pop convenience stores. Nestle Malaysia has also started distributing its products through e-commerce platforms.

On top of these, it also has a sizeable export business which contributed to 20.9% of its revenue in 2015. The rest of Nestle Malaysia’s revenue in the year came from domestic sales in Malaysia.

We think Nestle Malaysia has displayed a stellar long-term track record.

In the past 27 years since its listing, it has never recorded a loss. Meanwhile, its revenue has grown from RM 913.8 million in 1989 to RM 4.84 billion in 2015, which is an annual growth rate of 6.6%. The company’s earnings have climbed even more impressively by 9.4% per year over the same

period. Moreover, these were achieved without a single incidence of dilution to shareholders – Nestle Malaysia’s number of shares outstanding has remained the same since its listing in 1989.

The Power of Nestle

In our view, Nestle Malaysia has been able to grow its business due to two main factors.

The first is Malaysia’s economic growth. In 1989, Malaysia’s Gross Domestic Product (GDP) per capita stood at US$2,194. From then to 2014, the economic indicator has grown at about 6.8% per year.

According to the Malaysian government’s official guidance, the nation’s GDP is expected to show annual growth of 5% to 6% from 2016 till 2020. Malaysia is now one of the top five Asian markets for Nestle Global, the parent company of Nestle Malaysia. We think Nestle Malaysia can continue to take advantage of Malaysia’s growing economy.

The second factor is Nestle Malaysia’s strong brand, which translates to pricing power. The company’s gross profit margin has improved from just 12.7% in 1989 to 38.6% in 2015. Nestle Malaysia has achieved this margin expansion even when one of its competitors, a recent Stock Advisor Gold recommendation Super Group (SGX: S10), has only been able to maintain its gross profit margin over the last 10 years. We think this indicates the pricing power Nestle Malaysia enjoys over its peers.

Another demonstration of Nestle Malaysia’s strong brand, in our view, is the bargaining power it has over its customers (while the company’s products are consumed by consumers, its customers are actually the retailers). Nestle Malaysia has been steadily improving its cash conversion cycle over the years and achieved a cash conversion cycle of a negative 29 days in 2015.

The cash conversion cycle is basically a measure of a company’s effectiveness in converting its products into cash.

Section 1: Our “Buy” Recommendation on Nestle MalaysiaPublished in Stock Advisor Gold on 25 August 2016

https://www.fool.sg/2013/12/30/what-is-cash-conversion-cycle/


Having a negative cash conversion cycle means that Nestle Malaysia is able to receive cash from its customers before it needs to pay its suppliers. Therefore, the company would not require any working capital in its operations (indeed, Nestle Malaysia ended 2015 with current liabilities that exceed its current assets). Its customers (by paying Nestle Malaysia earlier) and its suppliers (by extending longer credit terms to Nestle Malaysia) are basically financing its operations.

The negative cash conversion cycle also leaves more cash in Nestle Malaysia’s hands. This gives Nestle Malaysia the ability to sustain a high dividend payout ratio. Over the past five years, its dividend payout ratio has been consistently above 80%. Moreover, its dividend has also been increasing over the years.

From 2006 to 2015, its dividend per share has increased at a rate of 14.0% (in ringgit terms). And, these dividends have been funded mainly from the company’s internal cash resources, given that it has consistently been free cash flow positive for the last decade.

One possible area of growth for the company is exports. In 2015, exports contributed nearly 21% to its overall revenue, as mentioned earlier.

2015

79.1%

20.9%

2014

79.3%

20.7%

Sources: Company 2015 Annual Report

Total Sales (%)

Domestic

Export

Nestle Malaysia is the second largest exporter of Nestle products for the entire Nestle group after the USA. It is also the largest Halal hub for the group. This means to us that Nestle Malaysia is a key centre for any of Nestle Global’s plans to expand to other Islamic countries.

Nestle Malaysia’s management has mentioned that its export business has been struggling over the past few years. But after a recent restructuring, it seems that this segment is ready to start growing again. In the company’s latest results for the first-half of 2016, the export business enjoyed double-digit growth.

Other initiatives the company is focusing on include more product innovation and experiments with e-commerce.

Nestle Malaysia not only adds new products to its suite based on Nestle Global’s product range, it has also been coming up with localised products for the Malaysia market. Right now, Nestle Global seems to be pushing for more products in the health science area. If this is successful, it might add a new segment of business for Nestle Malaysia as well. Nestle Malaysia has already started selling some health science products such as the NOVASOURCE Renal product for kidney patients and the feedback has been good.

On the e-commerce front, Nestle Malaysia has recently started partnering with some popular e-commerce platforms in Malaysia and reaching out to younger consumers who might not shop using traditional channels.

All these factors and growth opportunities indicate to us that the best is yet to come for Nestle Malaysia.

Low Risk Does Not Mean No Risk

As a business, we think that Nestle Malaysia has more upside than downside. However, this does not mean we should disregard the risks involved.

The most obvious of them all is the company’s concentration in just one market, Malaysia. As already mentioned, nearly 79% of Nestle Malaysia’s sales in 2015 come from Malaysia. Since it is a subsidiary of Nestle Global, it would most likely remain a Malaysia-centric company. To Singapore investors, investing into another market, even one such as Malaysia with close historical and cultural associations, will still expose us to risks relating to the foreign country’s political and currency situations.

Another risk to consider is the fact that Nestle Malaysia is managed as part of Nestle Global’s operations. This means that Nestle Malaysia shares many resources with Nestle Global’s other subsidiaries, thus resulting in huge amount of related party transactions.

In 2015 alone, Nestle Malaysia clocked more than RM1.6 billion worth of related party transactions including sale of goods and services, purchases of goods and services, and other costs such as royalties, and finance and IT expenses. Therefore, we think there is a risk that Nestle Global could one day be unfair to


minority shareholders of Nestle Malaysia in an attempt to protect the entire group’s operations.

Given that Nestle Malaysia has enjoyed a long period of growth and expanding margins, there has been little evidence in our view that Nestle Global has been short-changing minority shareholders of Nestle Malaysia. But, investors need to be mindful that past events are not definite reflections of the future.

Nestle Malaysia can be considered to be appealing to income investors with its strong and reliable dividend payouts. Yet, as its payout ratio is high – more than 100% in some years – any shortfall in its earnings might directly affect its dividend payments.

It is worth noting that the company did experience a drop in earnings during the Asian Financial Crisis in 1997 and it took the company a few years before it could stabilize its earnings again. Although there was no repeat of a drop in earnings during the 2008 Global Financial Crisis (Nestle Malaysia actually experienced growth in earnings during that period), it does not mean that a decline in profit is impossible in the future.

Lastly, as the economy of Malaysia progresses and its citizens become more sophisticated, the pattern of consumer consumption there might change as well.

For instance, rising affluence might see Malaysia’s population desire more imported products rather than domestic staples that include Nestle Malaysia’s products. As the market of Malaysia opens up (a typical scenario as an economy grows), there might be more products entering, leading to more competitive market conditions for Nestle Malaysia. Fortunately, such a scenario does not happen overnight, and we would most likely be able to monitor the level of competitiveness in the industry over time.

Is Nestle Malaysia Too Expensive?

With a price to earnings ratio of 26.9, Nestle Malaysia can hardly be classified as a deeply undervalued stock. If we compare the company’s P/E with say, the current P/E of 23 carried by pan-Asian retailer and recent Stock Advisor Recommendation Dairy Farm International Holdings (SGX: D01), Nestle Malaysia might even look overvalued at the moment.

Yet, we do feel that Nestle Malaysia deserves a premium compared to other consumer companies.

Nestle Malaysia has shown that it has pricing power over its competitors, such as Super Group, and bargaining power over its customers, such as Dairy Farm International. Nestle Malaysia has also demonstrated that its revenue and earnings are far more resilient compared to the two companies.

35.00x

40.00x

30.00x

25.00x

20.00x

15.00x

10.00x

Price To Earnings Ratio

DATE

PRIC

E TO

LTM

EA

RNIN

GS

Source: S&P Global Market Intelligence

5.00x

0.00x

Mar-92

Jan-94

Feb-93

Mar-14

Jan-16

Feb-15

Dec-94

Oct-96

Nov-95

Sep-97

Jul-99

Aug-98

June-00

Apr-02

May-01

Mar-03

Jan-05

Feb-04

Dec-05

Oct-07

Nov-06

Sep-08

Jul-10

Aug-09

June-11

Apr-13

May-12

If we compare Nestle Malaysia’s valuation against its own history, the current P/E is slightly higher than the average P/E of 25.6 over the last 10 years. But with its consistent track record of growth, we think this is hardly a concern.

A company with strong growth prospects has the opportunity to grow into its valuation. For instance, based on its net income in 2015, Nestle Malaysia is trading at a P/E of 31 at its current share price. That was much higher than the company’s P/E of 26.9 using its earnings over the last 12 months; Nestle Malaysia had experienced a 31.3% year-on-year increase in net profit for the first-half of 2016. This is what we mean by ‘growing into its valuation.’

In fact, if we look back at periods when the company had high P/E ratios, investors would still have enjoyed strong overall returns even if they had invested during those times.

Time Period Price To Earnings

Total Return Till Now CAGR

Jan -2004 36.0 501% 15.4%

Dec-2011 32.5 62% 11.3%


For a great company with a strong brand such as Nestle Malaysia, we feel that as long as the company is not excessively overvalued, there is still a good chance for investors to generate respectable long-term returns.


The Stock Advisor Gold Bottom Line

Nestle Malaysia is one of the largest and most well-managed food & beverage consumer companies in Malaysia.

The growing economy of Malaysia, the pricing power the company has over its competitors, and the strong bargaining position it has with its customers,

could push Nestle Malaysia to greater heights in the future. The company – as well as its parent – also has a strong innovative culture of creating new products.

When these traits are combined with its growing export business and stable dividend payouts, we think Nestle Malaysia is one stock you should snack on for your portfolio.

Section 2: Our Coverage of Nestle Malaysia’s First Quarterly Earnings Report as a Stock Advisor Gold RecommendationPublished in Stock Advisor Gold on 25 October 2016

Hello fellow Fools,

Nestle Malaysia (KLSE:4707.KL) just reported its third-quarter results earlier today. Its earnings have suffered slightly after a record second-quarter. Here are the highlights.Highlights for 2016’s Third-Quarter

» Revenue is up by 3.7% year-on-year to RM1.26 billion for the quarter. Both its domestic business and export business experienced top-line growth.

» More new products were launched. » Gross profit increased even more by 6.5% year-

on-year to RM491.3 million. The company cited better efficiency in its factories and supply chain as reasons for its gross margin improvement.

» But profit for the quarter fell by 10.3% to RM160.7 million. This was mainly due to higher promotions during the quarter.

» Earnings per share declined by 10.3% as well to RM0.685.

» The dividend for the quarter would be RM0.70 per share, up 7.7%.

Highlights for the First Nine Months of 2016

» Revenue increased 4.8% to RM3.8 billion. This was due to both higher demand in its domestic and export business.

» Gross profit also improved by 9.6% to RM1.54 billion due to higher operational efficiency and favourable commodity prices.

» These, as well as a lower effective tax rate, had boosted net income by 16.1% to RM570.2 million. Earnings per share climbed at the same rate to RM2.43

» The dividend declared is RM1.40 per share, up 7.7% compared to a year ago.

The Positives

» Demand for Nestle Malaysia’s products continue to show growth. The company has been actively expanding its product range and is also opening up new distribution channels (such as tying up with major e-commerce platforms in Malaysia).

» The improving gross margin gives us comfort that the company is actively looking for ways to find savings in its operations.

» The company segments its business into “Food & Beverage” and “Others”. “Others” includes business units such as Nutrition, Nestle Professional (a business-2-business, or B2B, unit) and the newly-formed Nespresso (the coffee capsule business). ◦ The strong growth in profit shown by Nestle

Malaysia in the first nine months of 2016


Section 3: Our Coverage of Nestle Malaysia’s Second Quarterly Earnings Report as a RecommendationPublished in Stock Advisor Gold on 28 February 2017

was carried by a 34% year-on-year jump in the operating profit of the “Others” segment. This shows that the new business segment is seeing very strong demand and growth and could become a larger contributor to Nestle Malaysia’s overall earnings in the future.

◦ All three sub-segments within “Others” serve different target markets as compared to Nestle Malaysia’s traditional customer base. This can lead to a much bigger addressable market for Nestle Malaysia.

◦ In the first nine months of 2016, the “Others” segment contributed around 20% of the company’s total revenue and operating profit.

The Negatives

» The company experienced a lower net income this quarter mainly due to higher promotional expenses. This might indicate that price

competition in Nestle Malaysia’s markets are increasing. This should not have a long-term impact on the company’s performance in our view, but it might affect operating profits over the short-term.

» If the level of price competition is to intensify, it may even affect Nestle Malaysia’s dividend payout.

Final Thoughts

We think the long-term prospects of Nestle Malaysia are intact. The addition of new products and the expansion in its Nutrition, Nestle Professional, and Nespresso business units give us confidence in the long-term growth potential of the company.

But, the company’s earnings have taken a step back after a record second-quarter. That is something we will keep an eye on.

Nestle Malaysia remains a Buy on our scorecard.

Fool On!

Hi Fools!Nestle Malaysia (KLSE:4707.KL) reported

its fourth quarter and full year results for 2016 today. It was overall, a decent year for the food & beverage company.

Let’s take a closer look at its business.Highlights for the Fourth Quarter

» Revenue is up 4.2% to RM 1.25 billion compared to a year ago. Growth was seen in both the domestic (up 3.5%) as well as the exports (up 6.4%) business.

» Gross profit inched down by 0.5% year-on-year to RM 457.6 million. Higher prices for some raw materials and a falling ringgit had dragged down the company’s gross profit, but these were

partially compensated by the revenue growth and improvements in internal efficiencies.

» Net profit fell sharply, by 32.9% to RM 66.9 million. Consequently, earnings per share also declined by 32.9% to 28.55 sen. The company cited “planned and exceptionally higher marketing and trade investments in preparation for the early Chinese New Year in 2017” as a reason for the lower profit.

» The board has proposed a final dividend of RM 1.30 per share for the quarter, unchanged from a year ago.

Highlights for the Entire 2016

» Revenue is up 4.7% to RM 5.06 billion. Again, the higher top-line was powered by growth in the domestic (up 3.3%) and export (up 9.6%)


businesses. Nestle Malaysia cited product innovation and successful marketing campaigns as reasons for its higher top-line.

» Gross profit climbed by 7.1% to RM 2.0 billion. The company had enjoyed favourable commodity prices and increases in efficiencies in its factories and supply chain.

» Net profit manged to grow by 7.9% to RM 637.1 million, which isn’t too far off from the company’s long-term growth rate. Earnings per share stepped up by 7.9% to RM 2.72 (the number of shares outstanding had remained constant).

» With the final dividend mentioned earlier, Nestle Malaysia’s total dividend for 2016 would be RM 2.70 per share, up 3.8% from 2015’s total dividend of RM 2.60 per share.

» Operating cash flow for the year is at RM 922.8 million, up 22.9% from RM 750.9 million in 2015. With capital expenditure of RM 123.1 million, Nestle Malaysia ended 2016 with RM 799.7 million in free cash flow, a strong increase of 33.4% from 2015’s free cash flow of RM 599.7 million.

» There’s more debt on Nestle Malaysia’s balance sheet than cash (RM 277.1 million vs. RM 24.0 million) as of 31 December 2016, but that’s nothing to worry about in our view. The company’s net debt to equity ratio is still a healthy 39.1%.

» According to S&P Global Market Intelligence, Nestle Malaysia has a negative cash conversion cycle of 40 days in 2016; this compares with a negative 29 days seen in 2015.

The Positives

» Nestle Malaysia ended 2016 with steady revenue growth, a high single-digit profit increase, higher dividends, and strong free cash flow growth. 2016 was also the first year that the company crossed the RM 5 billion revenue mark.

» The company managed to further shorten its cash conversion cycle in 2016. In our recommendation writeup on Nestle Malaysia, we discussed why we like its negative cash conversion cycle; it’s good to see the metric improve.

» The company’s export sales continued growing – if Nestle Malaysia can maintain this in the years ahead, it would help to lower its

geographical concentration risks. » Although Nestle Malaysia’s gross profit in the

fourth quarter dipped a little despite revenue having increased, we are heartened by the fact that internal efficiencies had improved; raw material costs will ebb and flow over time and it is more important, in our view, that Nestle Malaysia is constantly looking at ways to increase savings in its operations.

» Nestle Malaysia ended 2016 with free cash flow per share of around RM 3.41, which more than covers the total dividend of RM 2.70 declared for the year.

The Negatives

» As a reminder, Nestle Malaysia has two business segments: Food & Beverage, and Others. The latter is where business units such as Nutrition, Nestle Professional (a B2B unit), and Nespresso, are housed. The Others segment saw revenue and profit growth of 6.4% and 15.8%, respectively, in 2016. That’s healthy, but the fourth quarter of the year saw a sharp deceleration in the segment’s growth rates: ◦ In the first nine months of 2016, revenue

and operating profit there grew by 7.2% and 33.8%, respectively. But in the fourth quarter of 2016, revenue in the segment grew by just 3.9% year-on-year while operating profit declined by a sharp 65.4%.

◦ The Others segment serves different target markets as compared to Nestle Malaysia’s traditional customer base, so growth in that area would be important in terms of enlarging the company’s addressable market. We would be watching how the Others segment progresses in 2017.

◦ In 2016, the Others segment accounted for 20.2% of Nestle Malaysia’s total revenue (19.9% in 2015) and 19.3% of operating profit (17.5% in 2015).

» In our third quarter earnings update for Nestle Malaysia, we noted that the company’s profit in the quarter had declined and that it was due to higher promotional expenses. We also said that this might indicate that price competition could be increasing. The fourth quarter of 2016 showed a similar trend whereby growth in promotional expenses dinged the bottom-line,


although there was a good reason the company was spending heavily (to market for Chinese New Year, which happened a little earlier than is usually the case). We will be watching the level of price competition in 2017 and beyond.

Final Thoughts

As mentioned earlier, Nestle Malaysia ended 2016 with steady growth, driven in part by product

innovation. This is something we like to see and it gives us confidence in the long-term growth story of the company.

There are some concerns, as we had highlighted. We are watching them, but we don’t see any negatives that are too overwhelming at this point in time.

Nestle Malaysia remains a Buy on Stock Advisor Gold’s scorecard.

Section 4: Our Coverage of Nestle Malaysia’s Third Quarterly Earnings Report as a RecommendationPublished in Stock Advisor Gold on 26 April 2017

Hi fellow Fools!

Nestle Malaysia (KLSE: 4707.KL) reported its 2017 first quarter-earnings yesterday. It was a good start to the year for the company.

Let’s take a closer look at the business.

The State of the Business Now

Here’re some of the important financial numbers:

» Revenue for Nestle Malaysia in the quarter was up by 4.4% year-on-year to RM 1.37 billion.

» Gross profit grew slightly faster – by 4.9% to reach RM 547.2 million.

» Profit for the quarter was RM 230.4 million, an increase of 4.4% from 2016’s first quarter. Consequently, the company’s earnings per share for the reporting quarter also climbed 4.4% to 98.26 sen.

» Operating cash flow fell by 60.8% year-on-year to RM 90.4 million. With a slight increase in capital expenditure from RM 8.45 million to RM 9.01 million, Nestle Malaysia’s free cash flow for 2017’s first quarter declined by 63.4% to RM 81.4 million. The fall is nothing alarming at all, given that it’s only been a quarter.

» There’s more debt on Nestle Malaysia’s balance sheet than cash (RM 204.7 million vs. RM 21.9

million) at the moment, but that’s nothing to worry about in my view, either. The company’s net debt to equity ratio is a healthy 21.2%.

In all, Nestle Malaysia ended the first quarter of 2017 with steady growth in revenue and earnings. Its balance sheet remains in the pink and it managed to continue churning out free cash flow.

During the quarter, Nestle Malaysia saw revenue growth from both its Domestic as well as Exports business. The former’s revenue increased by 4.7% year-on-year due to “strong marketing and promotional supports as well as the new base created by new products introduced in the last two years that continue to benefit the [company].” Meanwhile, Nestle Malaysia’s Exports revenue grew 3.6% in the reporting quarter. It’s good to see the company’s export sales continue to grow.

Nestle Malaysia remains focussed on improving its operational efficiency. In its earnings release, the company commented that “internal efficiency initiatives and diligent cost management helped to over compensate the negative effects from increased commodity prices and weaker Ringgit.”

There was a blemish in the company’s performance in the latest reporting quarter, though. The “Others” segment – this houses business units such as Nutrition, Nestle Professional (a B2B unit), and Nespresso – had a somewhat


disappointing performance. Revenue was up 4.3% to RM 279.2 million, while operating profit was down slightly by 2.4%. The “Others” segment is where Nestle Malaysia is targeting a market that is different to its traditional customer base. So, it’s important in helping the company enlarge its addressable market. The fourth quarter of 2016 also saw the “Others” segment turn in an uninspiring performance. I’d be keeping a close eye on things here.

What’s Next?

Nestle Malaysia has a “cautiously optimistic” outlook on the Malaysian economy. Given the kind of products the company is selling, I think growth in the Malaysian economy would be a tailwind for its business. In any case, Nestle Malaysia is continuing

with its “Fuel the Growth” strategy. It will continue to focus on product innovation and on wringing out efficiencies in its supply chain. It will also ramp up its trade-and-consumer promotions. These are all smart moves by management, in my view.


Steady growth is what I like to see with Nestle Malaysia and it has delivered that in the first quarter of 2017. Admittedly, higher earnings growth would have been preferred, but mid-single-digit growth is nothing to sneeze at.

The company continues to have some problematic areas, as I mentioned earlier. But, in all, Nestle Malaysia’s performance is satisfactory.


Section 5: Our Coverage of Nestle Malaysia’s Fourth Quarterly Earnings Report as a RecommendationPublished in Stock Advisor Gold on 31 August 2017

Hello again,Nestle Malaysia (KLSE: 4707.KL) reported its

second-quarter results for 2017 last Friday.Highlights for the Second Quarter

» Revenue rose 3.8% to RM 1.24 billion compared to a year ago. The analyst briefing slides has not been uploaded yet, but Nestle Malaysia said the increase came from “effective marketing and trade activities for Ramadhan and Hari Raya”, and a strong showing in its export business.

» Gross profit fell 10.8% year-on- year to RM 469.9 million. Much like the first quarter, the decline was caused by higher prices for raw materials (milk powder, coffee beans and palm oil) and a weak ringgit.

» Net profit slid 14.2%% to RM 162.1 million. Earnings per share (EPS) followed suit, with a similar decline to 69.11 sen. Nestle Malaysia

did well to cut operating expenses by 15.9% but its efforts were undone by higher finance costs and a sharp increase in tax expense.

» Operating cash flow was RM 242 million, up 23.2% from the RM 196.4 million recorded a year ago. With capital expenditure of RM 32.1 million, Nestle Malaysia had almost RM 210 million in free cash flow, a 23.3%increase from a year ago.

» Nestle Malaysia ended the quarter with RM 31.2 million and RM 417.3 million in debt. The company’s net debt to equity ratio was around 54%.

» The board proposed an interim dividend of RM 0.70 per share for the quarter, unchanged from a year ago.

Highlights for the First Half of 2017

» Revenue is up 4.1% to RM 2.66 billion. Nestle benefitted from strong product launches like


MAGGI Hot Mealz, MILO “KAW”, KIT KAT Mini and MAT COOL Panda Ice Cream.

» Gross profit was down 3% year-on-year to RM 1.02 billion.

» Net profit fell 4.1% to RM 4.1 million. EPS slipped by the same percentage to to RM 1.67, with the number of shares outstanding unchanged.

» For the first half, operating cash flow was RM 332.44 million, down a hefty 22.2% from the same period in 2016. Capital expenditure was RM 41.2 million. Nestle Malaysia generated free cash flow of RM 291.3 million, a sizable decline from 2016’s first-half free cash flow of RM 392.5 million.

The Positives » Growth came from both exports and new

product launches. In our original write-up, we highlighted these two areas as a source of future growth. Furthermore, the recent product launches had a strong, localised flavour about it (who’s up for Milo “KAW”?).

» Nestle Malaysia was also able to reduce operating expenses, and increase sales at the same time.

» Free cash flow in the second quarter grew by over 23%, a good recovery from the 63.4% decline in free cash flow recorded in first quarter.

» As a reminder, Nestle Malaysia has two business segments, namely, food & beverage, and others. The latter is where business units such as Nutrition, Nestle Professional (a B2B unit), and Nespresso, are housed. The others segment grew by 4.8% in the first quarter, faster than the food & beverage segment. In our original write-up, we said that growth in this area would be a positive development. The others segment made up over 20% of first-half sales.

» The decline in net profit for the first half is a downer. But Nestle Malaysia said that it was confident that its “balanced approach to proactive cost management and effective trade and marketing investments” will improve the full-year profit after tax.

The Negatives » Sales growth was solid, but it is behind its

long-term growth rate of 6.6% (between 1989 and 2015).

» The biggest downers for the quarter were the lower gross profit and lower net profit. Free cash flow for the first half was also down by 25.8%, which may have led to the firm’s decision to keep the interim dividend unchanged.

» Operating profit for both the food & beverage and others segment were down for the quarter.

» There was a substantial increase in debt, going from RM 204.7 million at the end of the first quarter to RM 417.3 million in the latest quarter. The bulk of the increase came from short-term loans from a related company (there was no details shared on this).

Brief Thoughts on ValuationNestle Malaysia has a trailing EPS of RM

2.645. At its closing price on Wednesday of RM 84.00, the stock had price-to-earnings (PE) ratio of 31.8. Nestle Malaysia’s stock is trading at the higher end of its historical range, despite the headwinds that we see. As we noted in our original recommendation, the stock has traded at similar PE levels in the past, but still produced solid returns for shareholders.

As such, we are not ready to put the stock on hold at the moment. But consider taking a smaller position if you are looking at Nestle Malaysia for the first time.Final Thoughts

Nestle Malaysia ended 2017’s first half with steady sales growth but recorded lower profits and free cash flow. The company also decided to keep its interim dividend unchanged.

On the flipside, the company has expressed confidence that it will improve the profit after tax for 2017. A weaker Malaysian currency is not a new problem for Nestle. So, we will be looking at how the company deals with the headwinds over the next two quarters. Free cash flow also showed a marked improvement in the second quarter, and we will be keeping an eye on this figure as free cash flow is the source of future dividends.

While we see some positives, overall, we have to say that the negatives outweigh the positives for 2017’s first half. It hasn’t changed our opinion about the company, and we will continue to watch its performance.

Nestle Malaysia remains a Buy on Stock Advisor Gold’s scorecard.


Section 6: Our Coverage of Nestle Malaysia’s Fifth Quarterly Earnings Report as a RecommendationPublished in Stock Advisor Gold on 14 November 2017

Neslte Malaysia (KLSE: 4707.KL) reported its 2017 third-quarter results last Tuesday. It was not the best quarter from the company, but we don’t think there’s anything to worry about.The State of the Business Now

Here are some of the important financial numbers for Nestle Malaysia: » Revenue for the reporting quarter was up 4.8%

year-on-year to RM 1.323 billion. » Gross profit declined 8.2% to RM 450.83 million. » Profit for the period was RM 119.75 million, down

by 25.5% from 2016’s third quarter. Consequently, the company’s earnings per share for the reporting quarter declined by 25.5% to 51.07 sen.

» Operating cash flow for 2017’s third quarter fell very slightly from RM 183.85 million a year ago to RM 183.18 million. With capital expenditure increasing from RM 29.52 million to RM 34.60 million, Nestle Malaysia’s free cash flow declined by 3.7% to RM 148.58 million.

» As of 30 September 2017, Nestle Malaysia had RM 11.56 million in cash and equivalents, and RM 418.96 million in total debt. This gave rise to a net debt to equity ratio of 60.5%.

» The company declared an interim dividend of 70 sen per share, unchanged from the same quarter a year ago.

As we can see, Nestle Malaysia enjoyed steady revenue growth in the reporting quarter, but its bottom line was a different story, having declined by over 25%. The company pinned the blame on the anticipated increase of raw material prices (sugar, milk powder, coffee beans) and a fall in the value of the ringgit. The profit decline could have been worse if not for Nestle Malaysia’s “diligent cost management” – we see this as a sign of the company’s continued focus on improving its operational efficiency.

Nestle Malaysia’s balance sheet is in a net debt

position, but we’re not worried yet, given that the net debt to equity ratio is at a reasonable level of 60.5%. Moreover, the company’s free cash flow held steady in 2017’s third quarter.

The interim dividend is flat, and also much higher than the company’s EPS for the quarter. But, we should be looking at the company’s dividend coverage over an annual timeframe instead.

During the third quarter of 2017, Nestle Malaysia experienced revenue growth from both its Domestic as well as Exports business. The former’s revenue increased by 4.2% year-on-year due to “effective marketing” and trade activities on selected product categories. Meanwhile, Nestle Malaysia’s Exports revenue grew 6.8% in the reporting quarter, supported by “good growth registered by the Nestlé affiliated companies especially in the Asean region.” We like seeing growth in both the domestic as well as exports business.

Nestle Malaysia reported revenue of RM 254.74 million for its “Others” business segment in the third quarter of 2017, down 3.9% from a year ago. The segment’s operating profit also fell by 32.9% to RM 34.91 million. These are disappointing numbers. The “Others” segment houses business units such as Nutrition, Nestle Professional (a B2B unit), and Nespresso, and is where Nestle Malaysia is targeting a market that is different to its traditional customer base. The “Others” segment is thus important in helping the company enlarge its overall addressable market. We will continue to watch developments in this segment.What’s Next?

Similar to the first and second quarters of 2017, Nestle Malaysia has a “cautiously optimistic” outlook for the Malaysian economy. If Malaysia’s economy is indeed able to grow, I think it would be a positive for Nestle Malaysia, given the type of products it is selling.


The company is sticking with its “Fuel the Growth” strategy,and will continue to focus on product innovation and improving its operational efficiency. It will also be “intensifying [its] Trade and Consumer promotions.” These are very similar to what Nestle Malaysia has been saying it would do in the first and second quarters of 2017, and we like these moves.

In the latest earnings release, Nestle Malaysia said that its “proactive cost management and a different phasing of the marketing investments” gives it confidence that it can “achieve a satisfactory profit situation for the full year 2017.” Nestle Malaysia’s profit for the first nine months of 2017 had declined by 10.2% year-on-year to RM 512.25 million, so there’s some catching up the company needs to do in the fourth quarter of the year.


There are clearly some weak spots in Nestle Malaysia’s 2017 third-quarter earnings. But, management thinks the fourth quarter would be better.

At Nestle Malaysia’s closing stock price of RM 88.64 yesterday, the company has a trailing price-to-earnings (PE) ratio of 35.9. It also has a trailing dividend yield of 3.0%. The company’s valuation is certainly at the higher end of its historical range. But as we noted in our recommendation write-up, Nestle Malaysia’s stock has traded at similar PE ratios in the past, and yet still delivered solid returns for shareholders.


Section 7: Our Decision to Put Nestle Malaysia on “Hold”Published in Stock Advisor Gold on 27 December 2017

We recommended shares of food & beverage products manufacturer, Nestle Malaysia (KLSE: 4707.KL), in August 2016. It has since delivered a market-beating total return of 36% for us at Stock Advisor Gold, which is great. But we’re putting Nestle Malaysia on Hold for now.

As a reminder, when a recommended stock is on Hold, we think that investors should not be adding money to it or buying it – but, they shouldn’t sell either.Reasons for a Hold

Nestle Malaysia’s business performance since our recommendation has been respectable, when compared to its long-term historical growth record. In our recommendation write-up, we said that the company’s revenue and earnings grew by 6.6% and 9.4% per year, respectively, from 1989 to 2015.

Time period Year-on-year change in revenue

Year-on-year change in ernings per chare

2016 4.7% 7.9%First nine months of 2017 4.3% -10.2%

Source: Nestle Malaysia’s earnings releases

From the table above, Nestle Malaysia’s growth in revenue and earnings per share in 2016 were

similar to its long-term growth rates. The earnings performance from Nestle Malaysia in the first nine months of 2017 has been poor, but the company expects a “satisfactory profit situation” for the entire year. So, the business results delivered by Nestle Malaysia since August 2016 has been in line with our investment thesis.

But here’s the rub. At Nestle Malaysia’s closing price of RM100.00 on 26 December 2017, the company had a price-to-earnings (PE) ratio of 40.5. This is near the highestvaluation Nestle Malaysia has had going back to 1992. The high PE ratio, which also far exceeds the company’s earnings growth in 2016, is concerning to us.



We’re not willing to part ways with Nestle Malaysia now though. We think the competitive advantages we saw in the company’s business that we highlighted in our recommendation write-up are still intact. For instance, its gross profit margin in 2016 was 39.4% according to S&P Global Market Intelligence, up from 2015’s 38.6%. As another example, Nestle Malaysia’s cash conversion cycle improved from a negative 29 days in 2015 to a negative 41 days in 2016, based on data from S&P Global Market Intelligence. To us, these imply that Nestle Malaysia is still very much in control of its own destiny.

In our view, companies such as Nestle Malaysia can grow their business in ways that we can’t readily observe yet – so, it could pay to stick with them for the long run. It’s also possible for Nestle Malaysia to

carry a high PE ratio for an extended period of time.What Would Make Us Return Nestle Malaysia To a Buy Rating

There are a few factors that could make us consider returning Nestle Malaysia to a Buy rating in the future: (1) If we think the company is able to produce earnings growth that is materially higher than its past track record; (2) If the valuation becomes more attractive. We’re unable to pin down an exact valuation for Nestle Malaysia that would make us go “okay, it’s time to have a Buy rating again” as that would depend on how its business develops in the future.

We will continue to provide ongoing coverage on Nestle Malaysia’s important business developments within Stock Advisor Gold.

Section 8: Our Coverage of Nestle Malaysia’s Sixth Quarterly Earnings Report as a RecommendationPublished in Stock Advisor Gold on 21 February 2018

Nestle Malaysia (KLSE: 4707.KL) reported its 2017 fourth-quarter and full-year earnings update on Tuesday. There are some areas the company needs to work on. Let’s dig right in.

The State of the Business Now

Here are some of the important financial numbers for Nestle Malaysia:

» Revenue for the reporting quarter was up 2.5% year-on-year to RM 1.282 billion. For the whole of 2017, revenue increased by 3.9% to RM 5.260 billion.

» Gross profit inched up by 1.1% to RM 462.41 million in the fourth quarter, but declined by 3.4% to RM 1.930 billion in the year.

» Profit for the fourth quarter of 2017 was RM 133.54 million, almost double from the profit of RM 66.94 million seen in 2016’s fourth quarter. Consequently, the company’s earnings per share (EPS) for the reporting quarter increased by 99.5% to 56.95 sen. In 2017, Nestle Malaysia’s profit inched up by 1.4% to

RM 645.8 million, with its EPS also stepping up by 1.4% to 275.39 sen.

» Operating cash flow for 2017’s fourth quarter fell from RM 311.81 million a year ago to RM 190.07 million. With capital expenditure increasing from RM 58.79 million to RM 88.70 million, Nestle Malaysia’s free cash flow declined by 60% to RM 101.37 million. In 2017, Nestle Malaysia generated free cash flow of RM 541.24 million (RM 705.69 million in operating cash flow, and RM 164.46 million in capital expenditure), down 32.3% from 2016 (RM 922.79 million in operating cash flow, and RM 123.14 million in capital expenditure).

» As of 31 December 2017, Nestle Malaysia had RM 12.62 million in cash and equivalents, and RM 389.90 million in total debt. This gave rise to a net debt to equity ratio of 60.9%.

» The company declared a final dividend of 135 sen per share, up 3.8% from 130 sen a year ago. Nestle Malaysia’s total dividend for 2017


is 275 sen per share, 1.9% higher than 2016’s dividend of 270 sen.

In my 2017 third-quarter earnings update on Nestle Malaysia, I wrote:

“In the latest earnings release, Nestle Malaysia said that its “proactive cost management and a different phasing of the marketing investments” gives it confidence that it can “achieve a satisfactory profit situation for the full year 2017.” Nestle Malaysia’s profit for the first nine months of 2017 had declined by 10.2% year-on-year to RM 512.25 million, so there’s some catching up the company needs to do in the fourth quarter of the year.”

So, it appears that Nestle Malaysia did indeed manage to catch up in the fourth quarter, with its 99.5% jump in profit. But, the company’s full-year profit growth in 2017 is anemic at just 1.4%. The company is still producing a solid stream of free cash flow, so that’s good. But, 2017’s free cash flow is significantly lower than in 2016. Meanwhile, the balance sheet is in a net debt position, but the net debt to equity ratio is still at a reasonable 60.9%.

Nestle Malaysia’s total dividend for 2017 is nearly identical to its EPS for the year, which means its payout ratio is 100%. I would prefer to see a lower payout ratio, but it’s worth noting that Nestle Malaysia has historically had a high dividend payout ratio.

The company attributed its big jump in profit in the fourth quarter of 2017 to “continued sustainable cost management as well as a different phasing of the Marketing investments in 2017 compared to 2016.” Nestle Malaysia incurred exceptionally high marketing expenses in the fourth quarter of 2016 due to the early 2017 Chinese New Year. It’s good to see the company continue to focus on managing its costs.

During the fourth quarter of 2017, Nestle Malaysia experienced year-on-year revenue growth of 4.5% for its Domestic business due to product innovation, a refresh of existing products, and successful

marketing promotions. Exports revenue, meanwhile, declined by 3.2% due to “the later phasing of Chinese New Year 2018 which led to lower export sales” in the fourth quarter of 2017.

Nestle Malaysia reported revenue of RM 246.46 million for its “Others” business segment in the fourth quarter of 2017, down 1.0% from RM 248.89 million a year ago. But, the segment’s operating profit nearly tripled from 8.33 RM to RM 24.23 million. The lower revenue is disappointing. The “Others” segment houses business units such as Nutrition, Nestle Professional (a B2B unit), and Nespresso, and that is where Nestle Malaysia is targeting a market that is different to its traditional customer base. The “Others” segment is thus important in helping the company enlarge its overall addressable market. What I want to see here is strong revenue growth.

What’s Next?

In the past few quarters, Nestle Malaysia has said that it was “cautiously optimistic” on the outlook for Malaysia’s economy. The company’s tone has changed for the better in the fourth quarter of 2017. It said:

“At the backdrop of a more encouraging year for the Malaysian economy, we will continue with our “Fuel the Growth” strategy: Striving for efficiency increases all over the supply chain and reinvesting the realized improvements into the sustainable growth of the Company by innovating / renovating our portfolio and intensifying our Trade-and Consumer promotions.”

Based on the statement above, Nestle Malaysia intends to continue focusing on product innovation, improving its operational efficiency, and engaging in even more promotions. These are very similar to what Nestle Malaysia has been saying it would be doing in previous quarters. We like these moves.


In 2017, the company successfully launched a number of new products, such as MAT KOOL Fruity Bugz, NESCAFE Black Ice, MILO Nutri-up, and


MAGGI Hot Mealz. These new launches – along with successful marketing and trade promotions for other products – contributed to Nestle Malaysia’s revenue growth of 3.9% during the year. I like to see new product launches being successful, as that’s a key part of our investment thesis with the company. But, I also want to see the company produce better revenue growth in the quarters and years ahead in order to generate stronger profit growth than what it showed in 2017.

As a reminder, Nestle Malaysia is a Hold on our Scorecard. In my update on the company regarding its Hold rating, I wrote:

“There are a few factors that could make us consider returning Nestle Malaysia to a Buy rating in the future: (1) If we think the company is able to produce earnings growth

As of Monday (12 March 2018), shares of Nestle Malaysia (KLSE: 4707.KL) closed at RM 150.50 each, giving us a tasty gain of nearly 100% since our recommendation on August 2016. The company’s stock price has been on a great run of late, but we think it’s time to part ways with the food & beverage products manufacturer. We recommend that Stock Advisor Gold members Sell Nestle Malaysia.

If you may recall, we placed Nestle Malaysia on Hold on 27 December 2017 due mainly to valuation concerns. Back then, the company’s shares were trading at around RM 100.00 apiece, and had a trailing price-to-earnings (PE) ratio of 40.5. At Monday’s closing price of RM 150.50, Nestle Malaysia’s trailing PE had climbed to 55. As you can see from the chart below, this is really high when compared to history.

that is materially higher than its past track record; (2) If the valuation becomes more attractive. We’re unable to pin down an exact valuation for Nestle Malaysia that would make us go “okay, it’s time to have a Buy rating again” as that would depend on how its business develops in the future.”

With profit growth of just 1.4% in 2017, and a trailing price-to-earnings ratio of 44.1 (based on its closing stock price of RM 121.50 on Tuesday), Nestle Malaysia does not meet any of the factors that will make us return it to a Buy rating yet. We still think the company’s brand is strong, and that gives its business the potential for growth to reach stronger levels than what was seen in 2017. We will continue to watch Nestle Malaysia’s developments.


In our recommendation write-up, we mentioned that Nestle Malaysia had managed to grow its revenue and profit at annual rates of 6.6% and 9.4%, respectively, from 1989 to 2015. We were happy with these historical growth rates. The company’s business performances in 2016 and 2017 have been respectable too, as shown in the table below.

Section 9: Our Decision to “Sell” Nestle MalaysiaPublished in Stock Advisor Gold on 13 March 2018


Year Year-on-year change in revenue Year-on-year change profit

2016 4.7% 7.9%2017 4.3% -10.2%

Source: Nestle Malaysia’s earnings releases

Source: Nestle Malaysia earnings updates

But Nestle Malaysia’s recent, as well as long-term growth rates, are tepid when compared to its current valuation. This makes us think that the market is factoring Nestle Malaysia’s future returns into its present stock price.

For a taste of just how high a hurdle the company’s business has to cross in order for it to deliver satisfying long-term gains from here, consider the following scenario:

» It grows its revenue at 15% per year for five years, thus ending 2022 with revenue of RM 10.58 billion.

» It achieves a profit margin of 15% (from 12.3% currently) in 2022, thereby earning a profit of RM 1.59 billion in the year.

» It gets awarded a PE ratio of 35 with its profit of RM 1.59 billion, giving us a market

capitalisation of RM 56 billion five years from now. The projected value equates to an annualised return of 10.5% from the current market capitalisation of RM 34 billion.

These assumptions are very optimistic, especially on the revenue front. For perspective, the company’s revenue had increased by just 2.9% per year from 2012 to 2017. The aggressive assumptions could happen – Nestle Malaysia could have new consumer products up its sleeve that we don’t know of yet, which could become blockbusters. But, we don’t think it makes sense to take on the risk right now given that the market is giving us an opportunity to cash out a fantastic return (a near-double) in a relatively short span of time (in around 19 months). So, we’re recommending a Sell for Nestle Malaysia.

We may return for Nestle Malaysia in the future if we see that the company has indeed found a way to supercharge its growth rates with the introduction of popular new consumer products. But for now, we’re bidding goodbye, and we hope you’re celebrating a little with the nice gain! As a reminder, with this Sell recommendation of Nestle Malaysia, we will cease coverage on the company’s ongoing developments.

How YOU too can start living “The Gold Life” in 2018 and beyond…Unfortunately, Stock Advisor Gold is closed to new members at this time. And because this is our most exclusive, white-glove service here in Singapore, we only open Stock Advisor Gold on rare and special occasions — and have always limited the number of members we accept when we do reopen it.

Fortunately, to celebrate the two-year anniversary of Stock Advisor Gold’s Grand Opening, in May we’ll actually be reopening the service to new members for a very short time only.

And because you’ve registered your interest in Stock Advisor Gold simply by reading through this comprehensive, behind-the-scenes report, please rest assured that we’ve already added your email address to our “VIP Advanced Interest List.”

We’ll contact you right away in the lead-up to Stock Advisor Gold’s fast upcoming re-open (our first open of the year to new members, and only our third full open period in history).

Plus, we’ll give you the chance to take advantage of some extremely significant additional perks, should you decide to join us in Gold.

So please be sure to keep an eye on your inbox for important updates on our one-year anniversary festivities and upcoming open. And good luck with your investments in 2018 and beyond!

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