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NESTLÉ (M) Bhd appears to be regaining lost ground in the domestic market following the 2024 boycott, but analysts at CGS International Securities (M) Sdn Bhd believe the stock remains expensive relative to its earnings outlook. 

In a recent report, the research house maintained its ‘Reduce’ call on Nestlé while raising its target price (TP) to RM92 (from RM88 previously), after factoring in stronger sales recovery and a higher return on equity assumption of 110.3%. 

Nestlé’s results for the third quarter ended Sept 30, 2025 (3Q25), were broadly in line at the earnings before interest and tax (EBIT) level, but revenue came in stronger than expected. Core net profit rose 33.5% year-on-year (YoY) to RM114 million, lifting its nine-month earnings to RM387 million, up 3.5% from the previous year and account- ing for about 70% of CGS International Securities’s full-year forecast. 

Revenue climbed 9.4% YoY to RM5.2 billion, driven by a faster-than-anticipated rebound in market share. 

Domestic sales grew 7%, while export revenue surged 18%, supported by new product launches, including a coffee concentrate produced in Malaysia for regional markets. 

However, gross profit margin slipped to 30.1% from an earlier projection of 33%, indicating that Nestlé may have resorted to price discounting to regain customers. Still, savings elsewhere helped keep its EBITDA margin steady at 14.6%. 

In a post-results briefing, Nestlé’s management said the company had made “great strides in recovering lost market share” across product categories and regions, though it did not provide specific figures. 

CGS International Securities has trimmed its FY25 earnings estimate by 2.5% due to higher tax expenses but raised its FY26-FY27 forecasts by between 5.6% and 9.6%, reflecting stronger revenue momentum. 

Even with these upgrades, the brokerage sees Nestlé’s valuation as demanding, noting its FY26 price-earnings ratio of 39.7 times — high even after accounting for a projected 16% compound annual growth rate (CAGR) in core earnings between FY25 and FY27. 

CGS International Securities expects growth in revenue and earnings to normalise after the recent rebound, which could dampen investor enthusiasm following the stock’s 21.7% gain over the past three months. 

“We reiterate our ‘Reduce’ call on Nestlé with an increased TP of RM92, as we see its valuation as rich even after accounting for the recovery in earnings and export-driven growth,” CGS International Securities said. 

Potential re-rating catalysts, it added, include stronger export sales, accelerated domestic market share gains and a sharper-than-expected recovery in margins. — TMR

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• This article first appeared in The Malaysian Reserve weekly print edition

The post Nestlé’s market share rebound yet to justify lofty valuation appeared first on The Malaysian Reserve.

Progress depends on working together and ensuring no Malaysian is left behind 

by AKMAR ANNUAR 

TRANSFORMATION was the defining word at Permodalan Nasional Bhd’s (PNB) recent flagship PNB Knowledge Forum (PKF) 2025, where global thinkers, business leaders and youth advocates gathered to explore how Malaysia can renew its institutions, economy and communities for a fast-changing world. 

The forum carried the theme Transformation and featured an In Conversation session with Prime Minister (PM) Datuk Seri Anwar Ibrahim, alongside addresses by PNB group chairman Raja Tan Sri Arshad Raja Tun Uda and president and group chief executive Datuk Abdul Rahman Ahmad. 

The programme combined economic analysis, corporate strategy and personal reflection that offered a panoramic view of how transformation unfolds across systems, organisations and lives. 

In his opening remarks, Raja Arshad said transformation must be viewed as a national undertaking that goes beyond financial reform. 

He explained that PNB’s own trans- formation journey is rooted in inclusive wealth-building, ensuring that all Malaysians benefit from progress. 

“Transformation is no longer just about adaptation, it is about rethinking how we work, lead and create value at every level. 

“While we raise the ceiling of economic growth, we must also raise the floor of living standards, so that no Malaysian is left behind,” he said. 

Raja Arshad added that Malaysia’s transformation under Anwar’s leadership is not limited to economics but includes leadership governance, institutional integrity and societal equity — pillars that define the Madani Economic Framework. 

He also highlighted national initiatives such as the Public Listed Companies Transformation Programme (PLCT), the Malaysia Digital Economy Blueprint (MyDIGITAL) and the National Energy Transition Roadmap (NETR) as complementary efforts to build a fairer, more resilient economy. 

“This expansion holds a special meaning as it reflects our deepened commitment to nation-building. True transformation must extend beyond boardrooms and institutions, resonating with all Malaysians,” he said, referring to the forum’s inclusion of Amanah Saham Nasional Bhd (ASNB) unitholders and Celik Madnani students. 

Abdul Rahman explained that PNB chose “transformation” as its theme because global and domestic realities are reshaping every facet of life. 

He noted that the geopolitical landscape has been redefined since the change in the US presidency, while technology and artificial intelligence (AI) continue to transform how people live, work and invest. 

“At PNB, transformation is embedded in our strategic direction and operational philosophy. We recognise that organisations must continuously transform, adapt and innovate to deliver meaningful value,”
he said. 

He pointed out that Malaysia’s economic strategy, through the Madani framework, the New Industrial Master Plan 2030 (NIMP 2030) and subsidy rationalisation, aims to balance competitiveness with inclusivity to ensure sustainable, equitable growth. 

For corporate Malaysia, Abdul Rahman said the need for change is urgent, noting that total shareholder returns on the FTSE Bursa Malaysia KLCI (FBM KLCI) over the past decade have been anaemic, lagging even fixed deposit returns. 

“To avoid another lost decade, Malaysian companies must transform to deliver better shareholder value,” he added. 

Abdul Rahman outlined how PNB has evolved from a domestic, equity-focused investor into a global, multi-asset fund house. 

The transformation has strengthened its ability to deliver sustainable returns while improving investor accessibility through digitalisation and product diversification. 

PNB distributed RM14.5 billion in income last year — its highest in five years — bringing total distributions to RM263.7 billion since its inception. 

“Every transformation we undertake must be directed towards delivering better outcomes for our unitholders. Ultimately, we are enhancing the financial lives of Malaysians across generations,” he said. 

The Lego Lesson in Staying Creative

Lego Group former head of Global Brands Christian Majgaard brought an industry perspective on transformation, drawing from the toy company’s reinvention from wooden bricks to programmable robots. 

“For Lego, the value is creativity. The robot is a success because we are not only designing structures; we are also designing behaviour,” he shared. 

Majgaard explained that Lego’s trans- formation from a physical toy brand into a creative learning ecosystem required new partnerships and cultural humility. 

He described how the company collaborated with institutions such as the Massachusetts Institute of Technology (MIT) to create Lego robots, which now feature in educational programmes in over 50 countries. 

He added that transformation must be guided by focus and restraint. 

“You don’t manage the project; the project manages you,” he said, advising leaders not to change everything at once. Majgaard’s presentation emphasised strategic balance by keeping what works, deleting what no longer serves and introducing the new only when it adds genuine value.

He also reminded companies that innovation should not come at the expense of stability, citing Lego’s success in aligning creativity with commercial resilience. 

Brewing Transformation from the Ground Up

Zuspresso (M) Sdn Bhd (Zus Coffee) COO Venon Tian shared the company’s rapid growth from a start-up into one of Malaysia’s fastest-expanding coffee chains, crediting digital readiness and an agile business model as the main drivers. 

“We were very fortunate because the business was digitally built from day one. In 2023, we managed 1,065 stores and that milestone reminded us that systems, training and product discipline must grow with scale.” 

Tian said Zus Coffee’s concept was built around accessibility, selling premium-quality coffee at affordable prices. 

He added that transformation for the company meant balancing growth with consistency, from logistics to quality assurance. 

He also reflected on the lessons from scaling during the pandemic, when the brand’s mobile app and in-house delivery operations helped maintain customer engagement despite restrictions. 

Tian stressed that transformation is not just about expansion but about “repeating small actions that compound into big results.” 

Youth-led Transformation, Climate Action

Sustainability leader and Bye Bye Plastic Bags founder Melati Wijsen reminded the audience that transformation is driven by courage and community as much as by capital and technology. 

“Transformation requires bravery, the courage to ask big questions. All three levels, namely government, private sector and people, must be activated and respected at the same time to push for transformation,” she said. 

Wijsen, who started her campaign against plastic waste at age 12 in Bali, shared that true change often begins outside institutional frameworks through curiosity, care and collaboration. 

She encouraged participants to imagine a world where every business invests in a “department of failure” to normalise experimentation and accelerate innovation. 

She also highlighted her initiative Utopia, which offers workshops and masterclasses to empower students aged 12 to 25 to become changemakers in their own communities.

Her story illustrated how youth-led movements can translate activism into structured programmes, bridging personal conviction with collective transformation. 

From Policy to Practice 

The PM’s session, titled In Conversation with Anwar Ibrahim, served as the day’s anchor. 

He cautioned that while transformation may begin with policy, its success depends on the endurance of institutions and the moral courage of those who serve within them. 

“It is easy to pass policies, but it is very difficult to carry them through. People expect policies to meet high expectations, but in order to move to a better situation, we must give them the freedom to act,” he said. 

Anwar said transformation requires wisdom and patience — qualities often tested in a political climate of immediacy and polarisation. 

“Be patient. If you want to filter all that wisdom, you will be devoid of that wisdom,” he said. 

He also spoke about character and empathy as the foundation of national renewal, noting that leadership must model compassion and awareness in order to bridge divides within society. 

“Support each other, see each other and act together.” 

His remarks reflected the government’s broader commitment to institutional reform under the Madani Economy, which integrates moral and structural change across ministries and state agencies. 

A Connected National Narrative 

This year’s PKF marked the forum’s most inclusive edition yet, bringing together over 600 participants from policymakers and fund managers to university students under one agenda of transformation. 

PNB said the shift from its annual Minggu Saham Amanah Malaysia (MSAM) to PKF as a flagship event reflects its intent to position the forum as a national platform for dialogue, linking capital markets with civic understanding. 

Throughout the day, speakers explored transformation through four lenses — economic, geographic, organisational and personal — showing how shifts at each level reinforce one another. 

The underlying message was that progress is not linear but layered and that transformation succeeds only when anchored in equity, creativity and institutional trust. 

For PNB, the forum was as much a reflection as it was a declaration, a reminder that transformation is not an endpoint but an ongoing process. 

Raja Arshad concluded by saying that Malaysia’s success will depend on collective responsibility and consistent reform. 

For Abdul Rahman, the next phase of transformation involves deepening financial literacy, strengthening governance and ensuring that PNB’s ecosystem remains inclusive for future generations. 

“Let the insights shared today spark meaningful change in your organisations and communities,” he said. 

He urged everyone to keep transforming with purpose — not merely for the sake of change, but to improve the lives of millions of Malaysians and help them realise their hopes and aspirations. 

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• This article first appeared in The Malaysian Reserve weekly print edition

The post PNB reframes transformation as shared responsibility appeared first on The Malaysian Reserve.