Quick take: Guan Chong shares rise on new cocoa bean processing plant

KUALA LUMPUR: Shares in GUAN CHONG BHD rose over 1.9% this morning after the company announced plans to set up a new cocoa bean processing plant in Africa.

The cocoa grinder rose 1.91%, or eight sen to RM4.01, making it one of the top gainers on Bursa Malaysia. The counter has gained more than 80.1% in the past one year. It is currently trading at a PE ratio of about 8.5 times.

Guan Chong announced that it has allocated up to €60 million (RM278mil) to build a new cocoa bean processing plant in Africa over the next 18 months.

The plant will be located in Côte d’Ivoire and is expected to be commissioned and operational by the first quarter of 2021, which is expected to raise its production capacity by 60,000 tonnes per annum and allow Guan Chong to expand its market presence and strengthen its competitive advantage in the European market.

Guan Chong currently has a combined grinding capacity of 250,000 tonnes per annum, of which 130,000 tonnes comes from its two factories in Pasir Gudang, Johor, while 120,000 tonnes come from its plant in Batam, Indonesia.

The group said investment in the new plant is expected to be funded via internally-generated funds, bank borrowings, and/or proceeds from a proposed private placement exercise.

In the second quarter ended June 30, Guan Chong posted 42% jump in its net profit to RM60.1mil from RM43.03mil a year ago, on higher sales volume of cocoa products, which pushed revenue up 53% to RM753.06mil.

In the first half, it posted a net profit of RM114.13mil on revenue of RM1.4bil.

Source: TheStar