RESULTS REPORT

YTD 4Q FY16 total revenue increased 4.2% vs YTD 4Q FY15; exports fell 1.9% in sales value over the same period, though local sales value increased 11.1%. YTD 4Q FY16 operating margins came in at 20.3% vs 17.1% in YTD 4Q 2015. We expect operating margins to remain above 14% over the next several quarters. Cocoaland has been taking steps to raise margins and is making good progress under very challenging trading conditions. Export sales, accounting for about 55% of total sales, are still sluggish. However local sales have been growing enough to keep total sales rising. The strong USD, and the shift to own brand products have been beneficial for margins. See page five

INVESTMENT RISKS

Risks to our recommendation and target price include: i) rising trends in material costs, ii) an increase in the general level of interest rates, and iii) a sharp slowdown in the general level of economic activity in Malaysia or in the economies of the company’s major ‘own brand’ export markets - China/HK and the Middle East. See page five

RECOMMENDATION

We maintain our BUY recommendation on Cocoaland Holdings Bhd, and raise our fair value to MYR 2.88. It is possible that the share price will surprise on the upside; sales growth and capacity utilisation may accelerate more quickly than we expect. Cocoaland has very little debt on the balance sheet as well as plenty of cash. In fact, cash equivalents amount to 13% of the current share price. Cocoaland has a clean balance sheet and a proven record of growing sales (see page 5). The Middle East, Hong Kong, China, and Singapore remain in the top spot as the company’s largest export markets, with good progress developing in Taiwan, Vietnam and South Korea. Importantly, local sales rose about 11.1% YTD 4Q 2016 vs YTD 4Q 2015. See page five for 2012-2018 actual results and forecast

Source: Wilson & York Securities Research - 28 Feb 2017