FACULTY OF ACCOUNTANCY, FIANANCE AND BUSINESS

BACHELOR OF FINANCE (HOUNOURS)

ACADEMIC YEAR 2020/2021

BBMF 2023 PRINCIPLES OF INVESTMENT

NESTLE MALAYSIA BERHAD

PROGRAMME: RBF YEAR 2 SEM1

LECTURER/ TUTOR: MS.BAR SEOW POH
TUTORIAL CLASS: GROUP 1

STUDENT NAME:
No. Name Student’s ID
1. GOH MING SHUEN 19WBR05710
2. LEE JYE YING 19WBR05740
3. LIM YI TING 19WBR05764
4. LOI CHI SAN 19WBR05769
5. NG LEE LING 19WBR05780
6. SOH YEN YI 19WBR10282
7. TAI JIA YING 19WBR05821
ASSESSMENT CRITERIA
Criteria Maximum Marks Remarks
Marks Allocated
PART I: GROUP COMPONENT
1. Company analysis 40
2. Industry analysis 10
3. Economic analysis 10
4. Recommendation 10
SUB-TOTAL 70

PART II: INDIVIDUAL

COMPONENT
Capital gains/ losses 10
Name of Students:

i. GOH MING SHUEN

ii. LEE JYE YING
iii. LIM YI TING
iv. LOI CHI SAN
v. NG LEE LING
vi. SOH YEN YI
vii. TAI JIA YING

Justification 20
Name of Students:

i. GOH MING SHUEN

ii. LEE JYE YING
iii. LIM YI TING
iv. LOI CHI SAN
v. NG LEE LING
vi. SOH YEN YI
vii. TAI JIA YING

SUB-TOTAL 30
TOTAL MARKS AWARDED
Name of Students:
100
i. GOH MING SHUEN
ii. LEE JYE YING
iii. LIM YI TING
iv. LOI CHI SAN
v. NG LEE LING
vi. SOH YEN YI
vii. TAI JIA YING
 FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS
COURSEWORK FEEDBACK FORM FOR WRITTEN REPORT
COURSE CODE/ COURSE TITLE: BBMF2023 PRINCIPLE OF INVESTMENTS
NAME OF STUDENT(s): ID No:
1) GOH MING SHUEN 19WBR05710
2) LEE JYE YING 19WBR05740
3) LIM YI TING 19WBR05764
4) LOI CHI SAN 19WBR05769
5) NG LEE LING 19WBR05780
6) SOH YEN YI 19WBR10282
7) TAI JIA YING 19WBR05821
PROGRAMME: RBF
YEAR OF STUDY: YEAR 2 ACADEMIC YEAR: 2020/2021
SEMESTER: 1
GROUP NO: GROUP 1
COURSEWORK NO: NATURE OF MARKS ALLOCATED:
2 COURSEWORK:
Individual/group /100
assignment

COMMENTS :

Student’s Date: Lecturer/Tutor’s Date:

Acknowledgement: Signature:

Note: This form must be submitted together with the assessment grid/grading criteria
and Turnitin report for the coursework.
 KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN
FACULTY OF ACCOUNTING, FINANCE AND BUSINESS

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Read, complete and sign this statement to be submitted with your written work.

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Name (Block Capitals) Registration. No. Signature

1. …GOH MING SHUEN…… ……19WBR05710… ……..GOH…………

2. ……LEE JYE YING…… ……19WBR05740…… …….…LEE…………

3. ……LIM YI TING……… ……19WBR05764…… ……...…LIM………

4. ……LOI CHI SAN……… ……19WBR05769…… ……..…LOI………

5. ……NG LEE LING……… ……19WBR05780……

……...NG…………

6. ……SOH YEN YI………… ……19WBR10282…… …….…

SOH………

7. ……TAI JIA YING……… ……19WBR05821…… ……...TAI………

Course: RBF Year 2 Sem 1

Tutorial Group Number : …………Group 1………………

Date : ………………13 August 2020………………………………

BBMF 2023 PRINCIPLE OF INVESTMENT
ORIGINALITY REPORT

1 %
SIMILARITY INDEX
1% 0% %
INTERNET SOURCES PUBLICATIONS STUDENT PAPERS
PRIMARY SOURCES

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pestleanalysis.com

2
Internet Source <1%
www.theedgemarkets.com

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www.coursehero.com

3 Internet Source <1%

4 www.educba.com

Internet Source <1%

 www.thetrendfollower.com

5 Internet Source <1%

6 www.micronas.com

7
Internet Source <1%
"Super Sectors", Wiley, 2012

Publication <1%
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Exclude bibliography Off
Table of Contents
1. Company Analysis.................................................................................................................8

Company’s background...................................................................................................8

Financial Statement Analysis- Time series analysis.......................................................9

CROSS SECTIONAL PERFORMANCE ANALYSIS................................................11

Intrinsic Value.................................................................................................................13

2. Industry Analysis....................................................................................................................15

3. Economic analysis................................................................................................................17

4. Recommendation..................................................................................................................19

5. Group Appendixes................................................................................................................21

6. References............................................................................................................................23

7.Individual Part.......................................................................................................................25
1. Company Analysis
Company’s background
Nestle is the largest food and beverage manufactured company around the world and
its head office is located in Mutiara Damansara, Selangor. It set up the first branch in Penang,
Malaysia in 1912 as Anglo-Swiss Condensed Milk Company then moved to Kuala Lumpur in
1939 due to its expansion and growth. There are more product options and job opportunities
provided for the Malaysian in 1957 which is Malaysia's independence. Moreover, it now has
6 factories in Malaysia which provide job opportunities for more than 4,600 employees as its
workforce is 100% Malaysian. Nestle Malaysia is having approximately 500 Halal-certified
products for the citizens nationwide so they can have better living standards by enjoying
different types of products. It is their promise to the consumers where completely adapted to
its tagline and its vision and mission which are "Good Food, Good Life" and nourishing and
enhancing the lives of Malaysians for generations to come. Nestle Berhad has been publicly
listed on Bursa Malaysia since 1989[ CITATION Nes19 \l 2052 ].
Nestle aims to provide a portfolio of products to the consumer by segmenting their
consumers according to their age, purchasing habits, countries and lifestyles to boost more
sales. For example, milk powder that is suitable for infants to adults or offers a variety of
products for citizens suffering diabetes and high blood pressure like Nutren Diabetic.
Besides, Nestle encourages its market in different countries to adapt its products locally with
distinct packaging, composition branding or recipe as a respect in order to meet the local
consumers' needs and expectations [ CITATION Nesnd \l 2052 ]. Furthermore, by using
market expansion to enlarge its market where it had successfully diversify by introducing
more new products and allowed it to enter a new market such as culinary food, powdered and
liquid beverages, dairy products, chocolate, and even pet care which are under the trademark
like MAGGI, MILO, KITKAT, NESCAFE and more which are extremely popular brands
among Malaysian. Moreover, it practices product development by launching different
flavours products like Maggi noodles with Tomyam, Kari and other flavours. These strategies
can consequently increase its growth and margin to allocate more capital for better future
business performance.
In addition, Nestle generates its revenue through two major sectors which include
food and beverage and others which are considered as Globally Managed Business (GMB).
The revenue gained rose gradually from 2009 to 2018 but remains constant in 2019 which is
RM 5.5 billion. Food and beverages occupied a large portion for 84.8% while others
occupied for 15.2%. Its share price rose rapidly especially from June 2017 and reached the
peak in March 2018 for RM157.40 and slightly fluctuated among 2018 to 2020 as shown in
Appendix 1.
Financial Statement Analysis- Time series analysis
Liquidity Ratio: Current Ratio

Year 2015 2016 2017 2018 2019

Current
0.67 0.64 0.65 0.68 0.65
Ratio
(Gurufocus, 2020)

The current ratio of Nestle Company was 0.67 times in 2015, then it increase minimally in
the next three years and decrease from 0.68 times in 2018 to 0.65 times in 2019. As the
current ratio for Nestle Company in these five years were not more than 1, it means that
business does not have liquid assets to cover its short-term liabilities.

Assets Management Ratio: Inventory Turnover Ratio

Year 2015 2016 2017 2018 2019

Inventory
Turnover 6.83 6.91 7.49 6.71 6.38
Ratio
(GuruFocus, 2020)

The inventory turnover ratio were increasing from 6.83 times in 2015 to 7.49 times 2017.
Then it decrease from 7.49 times to 6.38 times in 2019. However, the ratios of all five years
are above 5 times, which means Nestle Company has an effective inventory management and
are selling products fast.

Debt Management Ratio: Days Payable Outstanding Ratio

Year 2015 2016 2017 2018 2019

Days
Payable 113.04 164.91 112.90 136.85 120.16
Outstanding
(GuruFocus, 2020)

In 2016, the ratio was 164.91 days, which was too high and taking too long to pay to their
trade payables, it may result in unhappy trade payables. After that, the ratio had decrease to
120.16 in the latest year, 2019, which indicates that the business can use their cash for short-
term investments.

Profitability Ratio: Gross Profit Margin

Year 2015 2016 2017 2018 2019

Gross Profit
38.56 39.45 37.09 38.73 37.58
Margin
(GuruFocus, 2020)

The gross profit margins went up and down between five years, the highest was 39.45 in
2016 and the lowest was 37.09 in 2017. Overall, the gross profit margin for Nestle is good as
it is above 30% which means it can make reasonable profit on its sales in these five years.

Market Value Ratio: P/E Ratio

Year 2015 2016 2017 2018 2019

P/E Ratio 29.14 28.78 37.96 52.46 51.23
(GuruFocus, 2020)

The P/E ratio decrease from 29.14 in 2015 to 28.78 in 2016. Then, in the year 2017 and 2018,
there is a significantly increase which is 37.96 and 52.46 respectively, which Nestle is
considered as growth stocks. However, the ratio decline to 51.23 in 2019 and may due to a
decrease in earnings.
CROSS SECTIONAL PERFORMANCE ANALYSIS
Nestle Malaysia Berhad (Target Company) compare to Power Root Berhad (Benchmark
Company)

Ratio Nestle Malaysia Power Root Berhad

Berhad
2019 2019

Liquidity Ratio - Current ratio 0.65 times 2.22 times

Asset Management Ratio - Days sales 30.36 days 137 days

outstanding ratio
Profitability Ratio - Gross profit margin 37.58 % 35.41%.

Market Value Ratio - P/E ratio 51.23 times 18.92 times

Debt Management Ratio - Debt ratio 76.68 % 34.57 %

Liquidity Ratio - current ratio

Nestle Malaysia Berhad(Nestle) stated that its current ratio is 0.65 times lower than Power
Root Berhad(Power Root) 2.22 times in 2019. This shows that Nestle has lower current assets
and will have problems in achieving current obligations within a year compared to Power
Root. In conclusion, Power Root has a solid liquidity position and better financial position
compared to Nestle.

Asset Management Ratio - Days sales outstanding ratio

Nestle has a shorter average turnaround in converting receivables to cash as according to

Nestle in 2019 is 30.36 days and Power Root is 137 days. This indicates Power Root may
have cash flow difficulties as selling products on credit and takes longer to collect money.

Profitability Ratio - gross profit margin

Nestle manages its cost of sales well as its gross profit margin in 2019 is 37.58% while Power
Root 35.41%. Nestle has more to compensate for operating, financing and other costs than
Power Root. Power Root has low gross profit margin does not generate strong sales prices
respectively to cost of goods sold, which is the costs to make products.

Market Value Ratio - P/E ratio

More investors are willing to invest in Nestle with higher share price due to growth
expectations as its P/E ratio in 2019 is 51.23 times higher than Power Root, 18.92 times
(I3investor, 2020). Power Root shows that current stock price is low respective to earnings.

Debt Management Ratio – Debt Ratio

Nestlé’s debt ratio is 76.68% higher than Power Root, 34.57% in 2019. Nestle will face
difficulties in borrowing loan and risks itself if interest rates suddenly increase while Power
Root has better company debt management and preferred by creditors.
Intrinsic Value
2018 2019
Revenue RM 5,519 million RM 5,518 million
Net Income RM -39,501million RM -37,001 million
Earnings per share RM 2.810 RM 2.870
Dividend payout ratio 96.29% 98.75%
Previous year dividend declared Rm 1.40 RM 0.70
Beta - 0.58
Market return 7.32% 6.75%
Risk-free rate 4.09% 3.32%
P/E ratio 52.46 51.23

Nestle is a company that manufacture food and beverage around the world. The company has
an decreasing in revenue at financial year 2019 which is RM 5,518 million compared to
financial year 2018 which is RM 5,519 million. In the financial year of 2019, it shown a
increasing in net income but the revenue decreasing is because they have a gain on the value
with the amount RM 2,500,000. With these information of the Nestle, we decide to use
constant growth valuation model to calculate intrinsic value. It is because the company
management are very proactive in expansion their business to overseas. For example, in India
and China also have Nestle and it would let more people like the product that produced by
Nestle. So, Nestle not only earn the profit from Malaysia but it also earn the profit from other
country the company of Nestle have more than 130 countries around the world.

In the annual report of Nestle Malaysia Berhad, we can get the information if you have pay
attention about financial part. Through the financial part of Nestle, we can know that Nestle is
it earn more than the previous year or having a decreasing and it could affect our decision
about want to buy the dividend to invest Nestle or not. In the financial year 2019, we get the
beta is 0.58 from the result review of Nestle. Also, the whole market return is 6.75% in the
year 2019 compared to the market return which is 7.32% in year 2018. It shows there is a
decreasing 0.57% in the market return from year 2018 to 2019 in Malaysia.

Required rate of return = Risk-free rate + Beta (Market return – Risk-free rate)

= 3.32% + 0.58 (6.75% – 3.32%)

 = 5.31%

Constat growth model = Next year’s dividends

Required rate of return – constant dividend growth rate

= RM0.70 (1.1)

5.31% - 1.90%

= RM 22.58

After using all the information with constant growth model to calculate the intrinsic value, we
get the answer is overvalued. The intrinsic value is RM 22.58 and compared to the current
market price which is RM 147. The current market price is lower than the intrinsic value so
the share price is overvalued and it is not the time to buy and hold.

2. Industry Analysis
SWOT analysis can identify and analyse the strengths, weaknesses, opportunities and threats
of a company which is a useful tool for the organization to regulate their operation.
 Strengths Weaknesses
1. Recognized brand-Nestle is a 1. Health issues- Some of the Nestle
recognized brand in Malaysia. Most products may cause health issues to
of the Malaysian know the brand of the long-term consumers. As several
Nestle which has a good reputation beverages and snacks of Nestle
in the market. It becomes a trusted contain high sugar levels which will
brand of beverage and foods in influence the consumer’s health in
Malaysia. Nestle as a recognition the long run. It leads to diabetes to a
brand enhances the credibility with person. For instance, a 100g Kit Kat
their customers. Wafer Bar comprises 49g of sugar
levels.
2. Environmental sustainability 2. Price fluctuations by retail giants-
achievement- Nestle uses recycled Grocery sales of Nestle in some
materials and chooses the renewable markets are increasing in a few retail
source as the materials. In 2017, 253 giants such as Tesco, Aeon and
of Nestle factories have achieved Giant. These retail giants have the
zero waste in their production. ability to make a reduction in price
Nestle has put their effort in order to of the Nestle products. Any
result in a cleaner environment. It is reduction by these retailers able to
essential for healthy living and affect the sales and profit of Nestle.
reduces the pollution. Therefore, Nestle doesn’t have fixed
income in their sales.
Opportunities Threats
1. Online market- Nestle can promote 1. Competitor among the market-
their sales through e-commerce and Nestle may face the increasing
online shopping platforms. competitor in the market who
Nowadays, more and more people produce the similar food and
are using internet to buy goods as beverage products. For example,
the online services make the Nestle faces the competitor of Power
consumer’s shopping experience Roof that offers similar products
more comfortable and convenient. such as Alicafe, Oligo and Ah Huat.
For example, Nestle can open new It is a threat for Nestle as consumers
distribution channels to sell the might choose Power Roof products
products such as Amazon, Shopee as a substitute.
 and others.[ CITATION Bri19 \l
17417 ]
2. New food start-up- Nestle can 2. Changing of consumer tastes-
increase their sales by creating the Consumer’s tastes are constantly
new food start-up under its brand shifting, Nestle need to have
name. As the Nestle already has a innovation on their products in order
famous brand name in the market, it to respond the buying patterns of
is an opportunity for Nestle to grow consumers. As the different needs
their investments in start-up that able and wants from consumers, Nestle
to assist the company to meet the needs to meet a risk of consumer
future challenges and increase the flavour changing.
profit. For example, Nestle can start-
up a health food store as more and
more people are focusing of their
health.
3. Economic analysis
Nestle company assess the general state of the economy and its potential effects based on
PEST analysis. The PEST analysis represent Political, Economic, Social and Technical.

Political
Nestle Company is an international company which it has to face change in regulations in
different countries. In Malaysia, the government was impose a new tax which is sugar tax on
July 2019. The government was imposed 40 Sen per litre on sweetened beverages containing
which more than five grams of sugar or sugar based sweetener per 100ml [ CITATION Ber19
\l 2052 ]. In this case, Nestle said that, Nestle Malaysia will not increase the prices of product
when imposed sugar tax. It is because exercise tax on sugary beverages is a small impact to
its business. According to chief executive officer Juan Aranols said that, they will not
increasing the price and they will find a way to absorb this impact by trying to cut sugar
from its products to make sure it is within the threshold that the government has defined for
the sugar tax application. At the end, we don’t see any change in the product price.

Economic

At 2016, Nestle Malaysia BHD was facing inflation due to the weaker ringgit. According to
Managing Director Alois Hofbauer said that the prices of raw material and packaging
materials and ringgit value were the key factors that would subsequently impact on product
prices. However, Nestle Malaysia BHD said they will not increasing its products price
although the raw material prices are increasing. He said, they will try to hold the prices, and
give consumers the best value for money as Malaysian consumers are under pressure on price
increases all around [ CITATION Dai161 \l 2052 ]. On the other hand, the exports segment
for Nestle Malaysia BHD was increase 12% in 2016 due to high demand from Philippines
and Indonesia. In this view, it was help Nestle Malaysia revenue increased from RM1.27
billion in 2015 to RM1.31 billion in 2016. At the end, increasing in inflation are not have a
negative impact to Nestle Malaysia BHd.

Social

The social factor such as buying behaviour, attitudes and changing demographics will
affected to business. Nestle is the public obsession with healthy eating, customer want to
consume less sugar and lower calorie foods. In ordered to fulfil the requirement of customer,
Nestle focus on reducing sugar, salt and saturated on some product. This will target some
healthy eating customer to buy it. However, Nestle also opens the door for new versions of
classic foods and drinks Nestlé consumers love to target all type of customer.

Technological

To become high effective of output, Nestle Malaysia was invest RM130 million for capital
expenditure in 2016. The investment mainly for mainly for capacity extension, product
innovation, as well as modernisation and upgrading technology. The high technology help
Nestle Malaysia not only in high efficient output but also help them to develop more healthy
food to fulfil the satisfaction of target customer.
4. Recommendation
Based on the Nestle Malaysia Berhad’s current share price which is RM142. In the
recommendation, I think that investor should buy and hold this Nestle Malaysia Berhad’s
share for long-term investment. The reason that I recommend the investor buy and hold this
share is because Nestle Malaysia Berhad as a century-old food producer, it has been striving
for the growth of performance and profit, and it has never stopped its progress when it has
been the No.1 in the share market. Nestle Malaysia Berhad can’t explore their market space
to bigger, but it does not mean that this company doesn’t to grow. I recommend to buy and
hold this company share is because it is a blue chip stock which is this company financially
strong and it is a high-quality stock with long and stable records of earnings and dividends.
When the share price volatility in market, it can be stable with not affected so it show this
stock is very resilient. Besides, Nestle Malaysia Berhad has numerous well-known brands,
including Milo, Maggie, Nescafe, KitKat, Nestle Ice-cream, Nestum, Omega milk and etc. In
this case, if you haven’t eaten any of these products, you must heard of them or seem these
products on the supermarket shelves. On the other hand, I think that Nestle Malaysia Berhad
can grow smoothly because this company keep innovative in their product and their brand
loyalty. First, Nestle Malaysia Berhad will launches new products, adds new flavours to
existing product and change product to healthier recipes every years. Second, most of the
customer have brand loyalty with this Nestle Malaysia Berhad because almost every family
can see Nestlé’s products. In this case, most of the consumers are custom with this company
tastes, so it’s not easy for consumers to change another brands. So this reason are also keeps
the Nestle Malaysia Berhad’s product smooth in the market. Moreover, another reason that I
recommended to the investor to buy and hold is because Nestle Malaysia Berhad’s are
generously distributed the dividend to the shareholders. According to my research, from 2016
to 2018, Nestlé’s net profit per share was 2 ringgit 70sen, 2 ringgit 75.5sen, and 2 ringgit
80sen respectively and company distributed 2 ringgit 70sen, 2 ringgit 75sen and 2 ringgit
80sen respectively to the shareholders. Nestle Malaysia Berhad have strong earning capacity
and gradual growth, as well as the return to shareholders, so believe that this is the reason for
the share price to rise. In addition, according to the financial statement analysis, the P/E ratio
show that year 2015 to 2019 have increase which is 29.14 to 51.23 so this company share
considered as a growth stocks. In the gross profit margin show that went up and down
between five year and it just have significantly difference, this show that this company have
stable profit on its sales in these five years. In conclusion, I recommended to the investor to
buy and hold for the long term is Nestle Malaysia Berhad is a stable stock compared to other
stock.

(2814 words)
Group Appendixes

Appendix 1: Nestle Berhad’s share price.

Appendix 2: Financial statement of Nestle Malaysia Berhad 2019.

Appendix 3: Statement of profit or loss

and other comprehensive income in year
2019.
References
1. Gurufocus 2020, ‘Nestle Malaysia Bhd Gross Margin % : 36.75% (As of Mar.2020)’,
viewed 8 August 2020,
<https://www.gurufocus.com/term/grossmargin/OTCPK:NSLYF/Gross-Margin-
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Individual Part:

Name: GOH MING SHUEN

Student ID: 19WBR05710
a) Trading Decision:
Position: Long position
Selected Company and Stock Code: Nestle Malaysia Berhad (4707)
Amount (RM): RM 60, 000

For marker use:

Opening Price:
Closing Price:
Return (%) of the stock:
Actual return (%):
(Adjusted for capital invested)
b) Justification:
Technical analysis

Technical analysis is analysing and anticipating price changes in financial markets,

using historical price charts and market statistics that traders can pinpoint previous market
patterns to make precise predictions of future prices. It is believed that the most reliable
indicator of future price actions is based on current and past price actions. Next, technical
analysts anticipate that the stock price will continue a previous trend than move
unpredictably. Based on the chart above, Nestle Malaysia Berhad’s(Nestle) stock prices are
comparatively low from April to the start of August 2020. However, in March its stock prices
started to grow when Covid-19 hit due to its healthy products to meet consumer requirements
and comfort. Thus, the unforeseen growth Nestle’s stock prices from RM137.800 in end of
May to RM 141,000 to 10 August due to Covid-19. This analysis assists investors in
investment decision of future trends within trading market. Therefore, the expected future
share price movement will be increased from 10 August 2020 to 17 August 2020. Investors
are confident that previous performance data patterns will determine future performance.
(NESTLE, 2020)
Fundamental analysis

Fundamental analysis is used to determine a stock’s fair market value. The analysts
observe stocks that are currently trading in higher or lower than its real value. By analysis a
stock’s trading price, a trader can assess a stock’s potential as profitable investment(Segal,
2020). According to the calculations in Nestle’s group report of constant increase model with
calculated the intrinsic value of RM22.58, compared to the current overvalued share price,
RM147. Next, Nestle’s financial statements will be extracted to compute several ratios. Due
to the higher share price, more investors are interested in investing in Nestle. Its market value
ratio of P/E ratio in the year 2017 increased from 37.96 times to 51.23 times in 2019. Nestle
is deemed as growth stocks and indicates investors’ evaluation of future earnings. Nestle has
a profitability ratio of gross profit margin of 37.58, being higher than 30% ensuring it to
create reasonable profit in 2019 sales. This gives a positive signal for investors to make
decisions in buying and selling decisions and to get a bigger image of a company’s financial
health. In the fourth quarter(Q4), its net profit increased 6.5% to RM131.82 million from RM
123.82 million. The strong expansion in the local business was supported by strong sales
accomplishment, victorious product revolution and effective marketing strategies that
contributed in future growth. (New Straits Times, 2020)

Sentiment analysis

Sentimental analysis interprets and categorises emotions like positive, negative and
neutral. For example, positive sentiments causes the stock prices to increase due to optimistic
sentiments. Positive sentiments can affect the stock prices and investing decisions. Nestle’s
positive sentiments sustained to deliver positive growth drive in the second quarter(2Q)
ended 30th June 2019 with a turnover of RM(Ringgit Malaysia)13.4 billion(New Straits
Times, 2020). The constant consumer demand gave positive earnings due to the support
through marketing investments with improved market shares. Thus, Nestle is able to defend
its strong standing in the FTSE4Good index series. This index calculate the execution of
industries demonstrating strong environmental, social and governance(ESG) practices. As a
result. the FTSE4Good Index Series allows investors to merge ESG factors into their
investment decisions to gain more profit, improved company reputation and share price
growth which encourage more investors to invest in Nestle company(The FTSE4Good
Investment Index, 2020).
Conclusion

In conclusion, I will make a long-term investment in Nestle. According to the

fundamental analysis, Nestle has a business plan rooted on high-quality food and beverage
goods that can only be sustained by the principles of long term sustainable development
which will generate more profit to attract more investors. As shown in technical analysis,
Covid-19 causes the stock prices to increase due to supply and demand in the market share
prices. The share price will increase when there is more demand for shares than supply.
Finally, as shown in the sentimental analysis, Nestle successfully uphold good reputation
through the increasing profits and contributions to long term society. Hence, I anticipate that
Nestle profits can be generated from the sale of their shares in the coming future due to the
long-term increasing prices.

(700 words)

Reference

Bursa Malaysia 2020, ‘Listed Company’, viewed 13 August 2020,

<https://www.bursamalaysia.com/trade/trading_resources/listing_directory/company-profile?
stock_code=4707>.

Segal, TS 2020, Fundemental Analysis, viewed 13 August 2020,

<https://www.investopedia.com/terms/f/fundamentalanalysis.asp>.

NST Business 2020, ‘Nestle Malaysia bullish on full-year growth’, viewed 13 August 2020,
<https://www.nst.com.my/business/2019/08/516618/nestle-malaysia-bullish-full-year-
growth>.

Nestle 2020, ‘The FTSE4Good Investment Index’, viewed 13 August 2020,

<https://www.nestle.com/ask-nestle/health-nutrition/answers/what-is-ftse4good>.
Individual Part:

Name: LEE JYE YING

Student ID: 19WBR05740

a) Trading decision (10 marks)

Position: Not to invest

Selected Company and Stock Code: NESTLE (4707)

Amount (RM): -

For market use:

Opening Price:

Closing Price:
Return (%) of the stock:

Actual return (%)

b) Justification (20 marks)

I not invest in this Nestle Malaysia Berhad is due to some analysis which is fundamental,
technical and sentimental analysis. First of all, I choose not invest in this Nestle Malaysia
Berhad is because this company share price is overvalued after using the information with
constant growth model. Compared to the current share price which is RM147, show the
intrinsic value is overvalued. In this case, I think that it is not the good time to buy and hold.
Other than that, in the liquidity ratio show this company in these five years were not more
than 1, so means that this company are not have liquid assets to cover their short-term
liabilities. Although other ratio which is assets management, debt management, profitability
and market value better but I still choose not to invest because I think that the current share
price are overvalued even though this company are significantly growth. In my research, net
profit are reduce to RM 49million or 20.79%. The main reason for reduce is the impact of
Covid-19 on the outdoor sales. Second, based on the technical analysis the historical price in
the last five days show the price are went up and down. The last five days show RM143.1,
RM139.5, RM139.6, RM 140.1, and RM142 respectively. It show there only slightly
difference in this five days. In this case, I think that this company are not growth rapidly and
it doesn’t have a good financial record. In my sentimental analysis, I have a negative feeling
with this Nestle Malaysia Berhad’s share it is because based on the performance of this
company in the past, this company show a stable growth but this growth rate has encountered
a problem in recent years. It is because the saturation of the market and increase in potential
competitors threat to the company. This company’s strategy is still cost control, internet sales,
and product development and innovation products but believe it will not be particularly
obvious in the short-term. Overall, this company has less potential for growth and lower
dividend payback due to the higher share price. In the result, I will choose not to invest in this
Nestle Malaysia Berhad is because I think that the share price are expensive and difficult to
earn capital gain. This company are growth slowly but stable. But I will not invest in this
Nestle Malaysia Berhad because I think that I can earn the capital gain and passive income
which is have a high dividend with other potential company’s share. The reason that I not to
invest this company is because I prefer growth stocks which is the stocks that experience high
rates of growth in operation and earnings. I am a risk taker as I will more prefer and expect
higher price appreciation due to increasing my earning. In this case, Nestle Malaysia Berhad
is a high share price and its growth slowly so this company’s share are not attract to me.

(492 words)

Individual Part:

Name: LIM YI TING

Student ID: 19WBR05764

a) Trading decision (10 marks)

Position: Long invest

Selected Company and Stock Code: NESTLE (4707)

Amount: RM 40,000

For marker use:

Opening Price:
Closing Price:

Return (%) of the stock:

Actual return (%):

(Adjusted for capital invested)

b) Justification (20 marks)

After I done our analysis about Nestle, we understand their business model and
financial performance. I realized that the company do not performed well in past few months
because of the covid-19. Now, I have RM100,000 capital and I decided to RM40,000 to long
position for Nestle, I believe that the stock is the potential stock and I will analyze through
technical, fundamental and sentimental analysis. But I will keep Rm60,000 for my backup
because I predict that the stock price will increase but many people not sure that is it the stock
price will increase or not because just facing the covid-19 in the past few months.

Based on fundamental analysis, we can know that in year 2019, the share price of
Nestle company is overvalued after using the constant growth model to calculate. The
intrinsic value is RM 22.58 and compared to the current market price which is RM 147. The
current market price is lower than the intrinsic value so the share price is overvalued but I
believe that the share price will undervalued in this year 2020. The gross profit margin went
up and down between five years, the highest was 39.45% in 2016 and the lowest was 37.09%
in 2017. The gross profit margin went down 1.15% from 2018 to 2019 but I believe that the
gross profit margin will went up again in year 2020. Overall, the gross profit margin for
Nestle is good as it is above 30% which means it can make reasonable profit on its sales in
these five years. Then, the prospect of Nestle will attract more long term investors to invest
their company. Now, they start to expand their business into other countries, such as China,
Indonesia and so on. This is because they want to diversity their business risk through expand
the business to other countries. Malaysia market is small so that they look to target the market
of other countries.
 For technical analysis, the historical price in the last five days shows the price went up
and down. The historical price for the last five days was RM143.1, RM139.5, RM139.6,
RM140.1, and RM142 respectively. Although it show only slightly difference in these five
days, I think that the price will continue increasing in the future days. The company chart
show an uptrend signal from April to August in 2020 but it shows a very serious downtrend
signal in the March. It is because in March, Malaysia meet covid-19 and almost all of the
business had influenced by the covid-19. Although Nestle meet a very serious impairment
loss in March, but it have an uptrend signal start from April and I believe that it will still
increasing in the future months. From the year 2001 to 2020, we can see that the company
chart shows an uptrend signal and I think that the stock price of Nestle will continue
increasing in the future few years. Thus, it is also one of the reason that I invest with long

position.
 For sentimental analysis, I think that it will have a positive sentimental in the share
price of Nestle Malaysia Berhad. This is because based on the company’s performance in the
past, Nestle company show a stable growth and I also believe that Nestle will also have a
stable growth in the future. Although the strategy of Nestle company is still cost control,
internet sales, product development and the innovative products but I still believe that it will
particularly obvious in the long term and the company also will improve to become a better
company in the future. In short, I think that this company has potential for the growth in the
financial.

In conclusion, I will buy the share of Nestle Malaysia Berhad with RM40,000 of my
capital. It is because I am not a risk taker and I would not take all my capital to invest it. I am
predict the share of Nestle Malaysia Berhad will increasing but I am not sure that is it my
prediction is correct or not, so I will keep RM60,000 for my backup to avoid the share price
is decreasing and I still have money to invest other shares.

(698 words)
Individual Part:

Name: LOI CHI SAN

Student ID: 19WBR05769

a) Trading Decision:

Position: LONG

Selected Company and Stock Code: Nestle Malaysia Berhad (4707)

Amount (RM): 48,000

For marker use:

Opening Price:

Closing Price:

Return (%) of the stock:

Actual return (%):

(Adjusted for capital invested)

b) Justification:

After I done this assignment, I had gained more knowledge and more understand
about Nestle Malaysia’s business model and their management. Therefore, I choose to invest
in long position with RM 48,000 is because in my expectation that the share price of Nestle
Malaysia Berhad will rise in the value during 10 August until 17 August. The reasons will
discuss through the technical analysis, fundamental analysis and sentimental analysis.

For technical analysis, in the chart 1, it is clearly shown that in the middle of March
until the middle of April, the stock price was under the baseline so it is red colour. There is a
great decrease is because that time was the outbreak of Covid-19 in our country, which was
also the time when government first implemented movement control order. Besides, the
decrease of share price may also due to the performance of Nestle Company, such as the
effect of closure of restaurants and coffee shops. However, the chart 1 shows that the share
price started to increase back in the middle of April, and even much more improved in the
middle of June until now. In addition, from chart 2 we can see that the share price of Nestle
Malaysia Berhad had go up starting in April, which is an upward trend that indicates Nestle is
in a good trend until now. The chart also shown that green candlesticks are more than red
candlesticks from February until August, which indicates that the opening price of most of
the weeks is higher than the closing price. Additionally, in 13 April 2020, there was an
inverted hammer, which means a downward trend and had buying pressure, followed by a
selling pressure, but it was not enough to drive the price down below its opening price. Then,
in between the month of July and August, the pattern of candlesticks are including bullish and
bearish, which is indicating the share price is likely to rise and is likely to fall. The tendencies
in share price movement is not stable and not guarantees.

Moreover, for fundamental analysis, from the Nestle Malaysia Berhad quarterly data,
the net profit margin of March 2020 is 12.99%, which had increase from 9.92% in December
2019, which indicates that Nestle Malaysia is more efficient in converting sales into actual
profit, Nestle had made more profit in first quarter of 2020 compared to December 2019.
Apart from that, the return on equity of Nestle Malaysia increased dramatically of almost 19
percent from 77.58% in December 2019 to 96.39% in March 2020. With an increase in the
net profit margin, business can also grow its return on equity. This can indicates that Nestle
Malaysia is increasing its profit without needing much capital and also means that its
management deploys shareholder capital. Additionally, we can know that the earnings per
share of Nestle Malaysia had increase slightly from RM 2.81 in 2018 to RM 2.87 in 2019.
This is a good sign for Nestle Company, which indicates more value because investors will
pay more for a company with higher profits. For the intrinsic value of Nestle Malaysia, after
using the constant growth model to find, it may be overvalued as the current price is RM 147.

Furthermore, in the sentimental analysis, Nestle Malaysia had announced that its
business will be using paper straws to replace plastic straws by the end of 2020[ CITATION
Ari20 \l 17417 ]. This initiative can help them to reduce the plastic waste and also
environment- friendly production method. Besides, this idea can help to raise the awareness
of people on recycling, which can bring a long-term societal impact for Malaysians. As the
business of Nestle Malaysia can lead a huge impact on the Malaysians’ lifestyle, therefore it
may attract more and more investors. This is because, investors will think this decision made
by Nestle Company can improve its reputation and image, so investors may invest more or
can attract new investors. For me, it is a good strategy for Nestle Malaysia as it is playing an
important role in developing well-functioning collection, sorting, and recycling programs in
the countries where it operates. Moreover, I strongly believe that the share price will have a
significant rise in the future is because Nestle is one of the top companies in the food and
beverage sector. Nestlé’s products such as ice-cream, beverages and foods always have a
good reputation among all the Malaysians include me since I was young. It is true that Nestle
had become the market leader in food and beverage sector, which will improve its business
growth in these years.

In a nutshell, with the analysis of technical, fundamental and sentimental, I believe

that the share price of Nestle Malaysia Berhad will increase. Therefore, in my opinion, I think
the long position is the right decision.

(796 words)
Appendixes

Chart 1: The historical share price of Nestle Malaysian from March to August.

Chart 2: The candlestick chart of Nestle Malaysia.

References
1. Zikri, A., 2020, Nestle Malaysia to Use Paper Straws for their entire UHT Range by The
End of 2020I, viewed 11 August 2020,
<https://www.malaymail.com/news/life/2020/07/23/nestle-malaysia-to-use-paper-straws-for-
their-entire-uht-range-by-the-end-o/1887302>

2. TradingView, 2020, Nestle (M) Berhad, viewed 11 August 2020,

<https://www.tradingview.com/chart/?symbol=MYX%3ANESTLE>

3. Bursa Malaysia, 2020, Nestle Malaysia Berhad, viewed 12 August 2020,

<https://www.bursamalaysia.com/trade/trading_resources/listing_directory/company-profile?
stock_code=4707>
Individual Part:

Name: NG LEE LING

Student ID: 19WBR05780

a) Trading Decision:

Position: LONG

Selected Company and Stock Code: Nestle (Malaysia) Berhad (4707)

Amount (RM): 60,000

For marker use:

Opening Price:

Closing Price:

Return (%) of the stock:

Actual return (%):

(Adjusted for capital invested)

b) Justification

After done our research for selected company which is Nestle Malaysia Bhd, I chose to invest
long position in Nestle Malaysia Bhd. I will invest RM 60,000 to Nestle Malaysia Bhd and
keep RM 40,000 as a backup. As an investor, I think we should not invest all the money into
a certain company, which means that we should have a backup to in case anything happen we
still have another choice to do another investment. I chose to invest this company based on
Fundamental analysis, Technical analysis and Sentimental Analysis.
For the Technical analysis which shown by Chart 1. The chart shown that the historical share
price for Nestle Malaysia Bhd from 2006 to 2020. Nestle Malaysia Berhad was shown
outstanding results in their performance especially for their share price. The trend of Nestle
Malaysia share price was continuously going up from RM 25 in 2006 and finally
breakthrough RM 100 in December 2017, until now the share price was RM140.10 in 7
August 2020. However, from the chart 1 shown that, Nestle Malaysia Berhad’s share price
was going down in 2020 especially for march 2020 the Nestle share price was drop until the
lowest price which is RM 133.20. This may due to the Covid-19 pandemic, since Covid-19
was strongly affected to Malaysia stock. However, nestle Malaysia was try their best to
control loses during Covid-19, thus their share price was finally increase back to RM 140.10
in 30 April 2020. This prove that the resistance of Nestle Company was strong. It is because
the stock price of nestle company was very stable and unaffected when the stock market is
turbulent. In this case, I strongly believe that Nestle Malaysia had potential on the stock price
and can keep increasing to make the shareholder profit while investing in long position in
Nestle Malaysia Berhad.

For the fundamental analysis, we found that Price earnings ratio (P/E) of Nestle Malaysia was
slightly high which 52.91 and the intrinsic value of the company is 22 which means that the
company is overvalued. However, although it is overvalued, the company equity of equity
(ROE) is 72.70% which means that, the company has high ability to make profit and has high
efficiency to help shareholder make profit. Other than that, The Earnings per Share (EPS) of
Nestle Malaysia was 266.10. The high Earnings per Share (EPS) indicates more value
because investor will pay more. Next, from the chart 2, we can see that, Nestle Company
profit was fluctuated which drop from RM 562 million in 2013 to RM 550 in 2014 and then
increased back in 2015 which is RM 591 million until RM 673 million in 2019. However,
their company Revenue was increased steadily which from RM 4,788 million in 2013 to RM
5,518 million in 2019. It means that the company was perform well and stable in their sale. In
this case, I believe invest in Nestle Malaysia Berhad is the good choice.

For sentimental analysis, I have a positive feeling about Nestle Company. It is because as a
company that was operated for a century, Nestle was try their best to make their product new
and creativity. Nestle was produce a lot different product such as MILO, MAGGIE,
NESCAFE, KIT KAT, NESTLE ice cream and so on. In 2018, nestle company was launched
out the creative product which is Maggie Pedas Giler. In 2018, the creative product such as
Maggie pedas giler was distribute 10% of the revenue. Other than that, Nestle produce a
necessary product and it has a huge loyalty customer base. Which means that, not matter what
product nestle was out, those customer will also buy it. It may due to the brand value of
Nestle has been recognized by consumer and it bring a positive effect to Nestle.

In conclusion, I will buy the Nestle Malaysia’s share and hold it as long position. Based on
Fundamental analysis, Technical analysis and sentimental analysis, I strongly believe that,
Nestle Malaysia has potential to keep increasing their share price and make profit.

(673 words)
APPENDIX

Chart 1: The historical price of Nestle Malaysia Berhad.

Chart 2: profit and Revenue of Nestle Malaysia Berhad.

Reference

1. Malaysiastock.biz. 2020, corporate information, viewed 10 August 2020,

<https://www.malaysiastock.biz/Corporate-Infomation.aspx?securityCode=4707>.
 2. KLSE Screener., 2020, Nestle (4707), viewed 11 August 2020,
<https://www.klsescreener.com/v2/stocks/view/4707>.

Individual Part:

Name: SOH YEN YI

Student ID: 19WBR10282

a) Trading Decision

Position: LONG

Selected Company and Stock Code: NESTLE (4707)

Amount (RM): RM50,000

For marker use:

Opening Price:

Closing Price:

Return (%) of the stock:

Actual return (%):

(Adjusted for capital invested)

b) Justification:

I will invest RM50,000 in the NESTLE(4707) stock and go for long position for this
stock. Below are the technical analysis, fundamental analysis and sentimental analysis that
explain my decision.

Technical analysis allows a trader to predict price movements in the financial markets
through examining historical data, mainly price and volume. It is a reference for traders to
make the financial decision such as buying, holding and selling stocks. Technical analysts
have a various tools that able a trade and investor to find trends and patterns on charts. For
example, the tools of moving averages, bollinger bands, support and resistance levels and
others.[ CITATION IG19 \l 17417 ] Based on the technical analysis for NESTLE, the moving
average period of 50, 200 are more moving sideways which indicates that the price
movements is not in either uptrend or downtrend. The NESTLE share is in a consolidation
zone which has a resistance level at around price RM142 and the support level at around
price RM138.69 which indicates that the price is moving in this consolidation zone. The price
trends is not either bullish or bearish because the price movements is not making higher
highs, higher lows or making lower highs, lower lows. In short, the share price of NESTLE is
in a consolidation zone which is no significant trends of moving up or down.

Fundamental analysis is a method of measuring the intrinsic value of an asset and

analysing the elements that able to influence its price in the future. Majority of the
fundamental analysis is used to measuring the share prices and it also can be used in asset
rank such as bonds. Fundamental analysis utilizes public data to evaluate the value of a stock.
[ CITATION IG191 \l 17417 ] Investors often use financial data such as revenue, net income,
gross profit margin, debt to equity ratio, cash flow from operating activities, earnings per
share, price to earnings ratio, return on equity for analysis. The revenue of NESTLE increase
from 4.8 billion in year 2015 to 5.5 billion in year 2019. The net income increase from 591
million in year 2015 to 673 million in year 2019. The gross profit margin is maintaining at
above 30% in the last 5 years which indicates that the company is making reasonable profits
on its sales. The cash flow from operating activities is above 700 million in the last 5 years
which indicates that the company has sufficient amount for any incidents. The earnings per
share is 251.9 in year 2015 increase to 287 in year 2019. The P/E ratio is 29.14 in year 2015
increase to 51.23 in year 2019 which indicates that the NESTLE is considered as a growth
stocks. The return on equity is 22.10 in the last 12 months and the return on average equity is
95.1 in last 5 years which indicates that the company utilise what shareholders have invested
in the company to make money. Based on the NESTLE’s overall performance, NESTLE is
said to be a company with consistent development and the financial data proved that the
NESTLE is a solid company. Therefore, the investors can invest in NESTLE share based on
the fundamental analysis.

Sentimental analysis allows traders attempt to determine when the market is being
driven by emotion rather than by rational decision making.[ CITATION BRA18 \l 17417 ]
Sentimental analysis is to analyze the sentiments of the investors and people. When the
market is positive sentiment, more people will buy the stock as they expect the stock prices
will increase and vice versa. Based on the sentimental analysis for NESTLE, there is positive
sentiment on the NESTLE share in the long term as the products of NESTLE are favourable
by Malaysian. The products of NESTLE included milk, cereals, beverages, coffee, ice cream,
confectionary and the list goes on. The variety products of NESTLE such as milo, kitkat,
nescafe, nestum, maggi has cater the taste buds of consumers. Malaysian drink milo or
nestum as their breakfast drink to kick start the day. Malaysian also love to eat kitkat as a
snack during rest time or tea time. Typical Malaysian will drink nescafe to freshen up
themselves when they are tired or sleepy during work time and Malaysian also love to eat
maggi for a quick meal. Other products of NESTLE also fulfil the daily demands of
Malaysian, Due to the high demand of NESTLE products to Malaysian, the NESTLE
company surely can have a good performance every year and the NESTLE share price will
also achieve higher prices in a long run.

In conclusion, although the technical analysis in not showing any significant trends
moving up or down, but the fundamental analysis and sentimental analysis proved that the
NESTLE stock is a good company to invest. Therefore, I believe that the NESTLE share
price will increase in future and I will go for long position even if the capital gains is small
but I can also earn money from the dividends given by the company.

(820 words)
Appendices
Appendix 1: Moving average of period 50, 200 for NESTLE Malaysia Berhad

Appendix 2: Support and Resistance level for NESTLE Malaysia Berhad

Appendix 3: Financial highlights for NESTLE Malaysia Berhad

Appendix 4: 5 years statistics for NESTLE Malaysia Berhad

References

IG, 2019. Fundamental analysis definition, VIEWED 10 AUGUST 2020,

<https://www.ig.com/en/glossary-trading-terms/fundamental-analysis-definition>

IG, 2019. Technical analysis definition, VIEWED 10 AUGUST 2020,

<https://www.ig.com/en/glossary-trading-terms/technical-analysis-definition>

WATCH, B., 2018. Understanding Sentiment Analysis: What It Is & Why It’s Used,
VIEWED 10 AUGUST 2020,
<https://www.brandwatch.com/blog/understanding-sentiment-analysis/>
Individual Part:

Name: TAI JIA YING

Student ID: 19WBR05821

a) Trading Decision:

Position: LONG

Selected Company and Stock Code: NESTLE (4707)

Amount (RM): 45,000

For marker use:

Opening Price:

Closing Price:

Return (%) of the stock:

Actual return (%):

(Adjusted for capital invested)

b) Justification:

As an investor, I will invest RM45,000 in the long position of Nestle Berhad. From
the assignment done, I realised that Nestle is performing well in its efficient management and
operation which can generate a constant or increasing profit every year and I also believe that
this is a potential stock that deserves to be invested in.

Based on the fundamental analysis, the overall quarter-over-quarter result of Nestle

Berhad in 2020 is better than 2019. Its current ratio in Q12020 is 0.75 which is higher than
Q42019. This indicates it is more liquidity compared to last year as its current liabilities are
decreasing and the company is capable of paying their short term obligations by using its
current assets. Although the operational costs is higher in 2020 as a protection to their
employees for the continuous supply for food and beverages during MCO but for the net
profit margin in Q12020, it increased by 3.07% from the previous quarter as both net profit
and revenue are increasing. The increment shows the higher sales during preparation of
Chinese New Year that falls at the end of January 2020. However, during the Covid-19, its
domestic sales were affected due to the closure of its retail channels but this situation was
lightened. This is due to the great growth in export sales whereby Nestle's products are halal
that allow it to export more to Islamic countries which consequently boost the revenue.
Besides, the return on equity (ROE) rises to 96.39% from 77.58% in 2019 which indicates
that the management utilizes the shareholder's fund effectively to generate more profit. P/E
ratio slightly rises for 0.14 in this year. The P/E ratio is slightly increased by 0.14 while its
EPS is 23.24 cents higher than 2019 and it is overvalued as shown by the intrinsic value.

In technical analysis, there is a chart that shows the share price for the period for six-
months. Among these months, the share price is the highest in 17 February with RM145.00
and the lowest in 16 March 2020 which is RM133.20. The drop of share price may be due to
the Covid-19 and started to increase afterwards may due to MCO being promulgated on 16
March. As we can see from the candlestick chart, the share price reaches the lowest closing
price among the whole day on 13 March where its opening price is RM134.60. There is a
bearish shaved bottom candlestick recently where the closing price is also its lowest price on
11 August. A green Marubozu candlestick appears on the next day which may indicate a
reversal for price rising. The appearance of this pattern is sometimes defined as a bottom
reversal signal where the share price may start rising afterward. In addition, Moving Average
Convergence Divergence (MACD) is used to indicate a new trend of the share price. As
shown in Chart 1, the DIF line (blue) has cut the DEA line (red) in an uptrend. This situation
shows that the share price may increase and the right timing to buy it where the divergence is
positive.

Based on the sentimental analysis, I believe that the share price will continue to rise
because their performance will be better than before. This is because Nestle will continue to
grow and have better performance under efficient operations. During the Movement Control
Order (MCO), all the restaurants are closed down and will strongly affect the sales of Nestle
products. However, this situation is expected to be enhanced within a short period as the
restrictions on restaurants are continuously lifted where their products sales can increase
steadily[ CITATION Pea20 \l 2052 ]. Furthermore, Nestle focuses on portfolios as it is always
striving to produce more new products for their customers to boost their living standards.
Nestle planned to launch approximately 20 new products this year which means that it can
attract more consumers to purchase their products that might be more profitable than previous
year. It also maintains its dividend policy of a minimum 95% of the net profit which can
provide more confidence to the investors. Nestle will allocate CAPEX investments to invest
in its manufacturing capabilities to expand current MAGGI noodles production capacity and
enhance its production line for greater future potential. Moreover, another reason that
encouraged me to invest in Nestle due to its confidence in the domestic market's potential and
its ability to enhance growth in post covid-19[ CITATION Far20 \l 2052 ].

In brief, by using the information obtained from these analysis, I strongly believe that
the share price will rise. Apart from that, Nestle is considered the best company in the food
and beverages industry due to its dazzling performance compared to other competitors.
Hence, I will invest in a long position to maximize the profit.

(786 words)

Chart 1

References

Adilla, F 2020, Nestle Malaysia to spend highest capex in six year, posts resilient FY20,
viewed 03 August 2020, <https://www.nst.com.my/business/2020/05/590099/nestle-
malaysia-spend-highest-capex-six-year-posts-resilient-fy20>.
Neo, P 2020, Bouncing back: Nestle Malaysia confident in post-COVID-19 recovery amid e-
commerce push, viewed 05 August 2020, <https://www.foodnavigator-
asia.com/Article/2020/06/10/Bouncing-back-Nestle-Malaysia-confident-in-post-COVID-19-
recovery-amid-e-commerce-push?
utm_source=copyright&utm_medium=OnSite&utm_campaign=copyright>.