Nestle Malaysia margins may hold up despite El Nino cost risks
Maybank IB expects the El Nino impact on Nestle Malaysia's costs to emerge gradually, mainly in 2027. The bank raised its target price to 122.80 ringgit.
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what happened
According to Market Talk, Maybank IB analyst Jade Tam says in a note that the El Nino impact on Nestle (Malaysia)'s costs may only appear gradually, in 2027, even though adverse weather is hurting spot raw material prices.
In her view, lower cocoa and coffee prices should keep supporting profit margins in the coming quarters, while the company's advance purchasing strategy could delay the effect of higher raw material costs. Higher government cash aid may also help sales and partly offset cost increases next year, she adds.
Tam raised her 2026, 2027 and 2028 earnings estimates by 15%, 5% and 2%, respectively, after third-quarter earnings beat expectations. Maybank lifted its target price to 122.80 ringgit from 120.00 ringgit and kept a buy rating. Shares rose 2.5% to 96.66 ringgit.
why it matters
For investors, the story is a specific example of how consumer companies absorb rising input costs. For Nestle Malaysia, the key driver of margins right now is cocoa and coffee prices, while the weather risks may take time to show up in the numbers.
market impact
Nestle Malaysia: higher earnings forecasts and target price, focus on raw material costs
tags
instruments
sources
- Nestle (Malaysia)'s Margins May Hold Up Despite El Nino Cost Risks — Market Talk, 28 October 2026 at 01:15 UTC
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