Nestle to gain from govt cash assistance plans

PETALING JAYA: Consumer boycotts on certain Nestle (M) Bhd’s products hit its peak in the financial year 2024 (FY24) and since then, a gradual sales volume improvement has been seen in the second quarter of 2025 (2Q25).

Maybank Investment Bank Research (Maybank IB) said the group’s domestic sales in 2Q25 grew by 6% year-on-year (y-o-y).

“Based on Euromonitor data, the group’s market leadership in its core brands (that is Maggi, Milo, Nescafe) has also remained strong, with 2024 market share for instant coffee mixes (Nescafe) and other hot drinks (Milo) at 27% and 72%, respectively, although its market share in the instant noodles category (Maggi) weakened to 43% in 2024 (versus 48% in 2023).

“This is a testimony to Nestle’s strong brand loyalty and its ability to stave off competitors amid temporary negative brand perception,” the research house said in a report yesterday.

Maybank IB said Nestle is well positioned to benefit from the rollout of the government cash assistance programmes, given the staple-nature of its product range.

The research house noted that with expectations for waning consumer boycotts and the group’s existing market leadership within its core brands, the one-off RM100 Sumbangan Asas Rahmah (Sara) cash aid may lead to a faster pace improvement in group sales in the second half of 2025 (2H25).

“With over 90,000 stock keeping units across 14 product categories within the Sara programme, we believe that Nestle stands to be a clear beneficiary of the RM100 one-off government cash aid (to be used from Aug 31 to Dec 31, 2025) to all eligible Malaysians aged 18 and above, due to its wide essential food and beverage product range,” Maybank IB said.

The research house said based on its channel checks, the majority of consumers have chosen to spend their cash aid on non-perishable items – of which Maggi noodles, Milo drinks/powder variants, Nescafe original, canned sardines, evaporated milk and biscuits appear to be popular choices for an average consumer basket.

Maybank IB said its FY25 earnings projection of 23% y-o-y is premised on progressive sales recovery in 2H25, led by abating effects from consumer boycotts, uptick in consumer spending during the year-end festivities, alongside a sales volume boost from the RM100 one-off Sara aid. Further, Nestle also offers pedestrian dividend yields of 2% to 3%.

Maybank IB maintained a “buy” call on Nestle with a higher target price of RM107.