Posted by VenFx > 2019-05-17 22:04 | Report Abuse

Woah ! PUNTER eat choc weekly ahh ,
No wonder always young n energised

Posted by (US/CHN trade war doesn't matter) Philip > 2019-05-17 23:23 | Report Abuse

I'm not really interested in cocoa grinders, it's too easy to export and process and there are too many competitors. Everyone knows lindt and ferero and Cadbury and Royce. Not many people know guan Chong. The former have pricing control and a moat, whereas guan Chong only make money recently for to consolidation and low Malaysian currency. There is no long term competitive advantage, as 2014 shows.

If you think about it, it is very very easy to process cocoa around the world, turn it into blocks of chocolate and ship it around relatively easy. The ones that have staying power on the grinding end are those that produce their own cocoa and have their own farms. Even then, the better the quality, the lower the margins for grinders. I'm not a fan of these kinds of businesses.

I think there is a perfectly valid why gcb is pe10.

Malaysian don't know how to appreciate or buy good chocolate. Nestle has trained the average Malaysian into thinking good chocolate is just sweet cocoa(aka Milo). That's why the average Malaysians won't pay up for Godiva/Royce chocolates etc. To them, a Cadbury chocolate is a good chocolate ( which is untrue, it's just milk,sugar and emulsifier, flavoring and coloring and a little bit of cocoa).

If you tried eating a bar of 100% pure chocolate (no sugar added, just pure cocoa), it would be unedible. I've tried.

The real money is not in the supplier, it's the end manufacturer. Just ask Cadbury and Nestle.

Funnily enough, cadbury became a household name when they reduced the amount of chocolate in their mix and added now milk (Cadbury dairy chocolate).

GCB not my cup of tea.

Posted by lmy059c > 2019-05-18 00:22 | Report Abuse

let me add some salient points to the brief, professional and unbiased report. GCB is listed as RHB's one of the top 5 small cap jewels for 2019. Its last 1 yr return is more than 150%. GCB is the largest cacao grinder in Asia and the 4th largest in the world. GCB is NOT a chocolate manufacturer itself but it supplies cacao ingredients (4 types altogether) to other chocolate manufacturers including world class choco manufacturers such as Hershey and Mars. So, please please don't ever compare GCB to other small choco manufacturer like Cadbury...…..

Posted by OPMS > 2019-05-18 01:00 | Report Abuse

choco-punter.. hehe

Posted by (US/CHN trade war doesn't matter) Philip > 2019-05-18 07:24 | Report Abuse

Good point, however... Why does Berkshire buy See's candies? Why does mondelez buy Cadbury? Why is Hershey's a rm100b company? Why is gcb historical net profit margins sub5%? Why

The simple answer is pricing power due to brand recognition and market competition. Simply put, there is no way for gcb to raise prices without hurting their margins. The moment they do, everyone will start buying raw materials from somewhere else cheaper.

Think of it this way: everyone know h&m, Zara and Uniqlo. The average person doesn't even care who that Indian or Chinese company that supplies all the clothes to them. The moment the Indian/China company starts to raise prices or complain about low margins, zara, H&M and Uniqlo can just go down the street to Bangladesh and get cheap raw materials from there.

I don't know how long the global demand will continue to be so high. But what I do know is, everyone including gcb is rushing to increase the manufacturing space and production capacity, which will lead to a overcapacity.

GCB is commendable in reducing their borrowing from 780 million to 600 million, but it makes you wonder why a "wonderful" company with 50 million in cash needs to borrow so much and pay such a huge interest every year ( and dividends), while other companies like Nestle,Mars, Hershey's and Cadbury(mondelez) are cash generating cows with very low dent levels.

If you think they will continue to enjoy high margins 5-10 years from now, gcb is definitely a good buy. But I find it unlikely in the long run. Especially when I realize I have almost as much deposits, bank and cash balance as GCB. That is worrying.

>>>>>

Posted by lmy059c > May 18, 2019 12:22 AM | Report Abuse

let me add some salient points to the brief, professional and unbiased report. GCB is listed as RHB's one of the top 5 small cap jewels for 2019. Its last 1 yr return is more than 150%. GCB is the largest cacao grinder in Asia and the 4th largest in the world. GCB is NOT a chocolate manufacturer itself but it supplies cacao ingredients (4 types altogether) to other chocolate manufacturers including world class choco manufacturers such as Hershey and Mars. So, please please don't ever compare GCB to other small choco manufacturer like Cadbury...…..

Posted by cheoky > 2019-05-18 09:51 | Report Abuse

Kc hint gcb is same class as Sendai when gcb is about rm2+. I rub my eyes to reconfirm. Company with brand and company with anonymous, both still got a value as long as cash flow is generated gruesomely or at ease in your Phillip eyes. Guan Ching is top 6 choco grinder in the world. This is not for Philip Fisher. This is for contraction of Warren buffet moat to make money. Let market tell u n me.
But director definitely know its company better Mr Phillip. I follow him on this rather than u lo.

Posted by cheoky > 2019-05-18 09:51 | Report Abuse

Contrarian*

Posted by (US/CHN trade war doesn't matter) Philip > 2019-05-18 10:18 | Report Abuse

Yup, I never ask anyone to follow me, I am just presenting my 'contrarian" view of what I think about the company. In fact, I would advise anyone that can't make their analysis but relies on old men like me or what other people say to not put their money into stock market.

Very dangerous if you don't know what you are doing or why you are buying.

Posted by lmy059c > 2019-05-18 15:17 | Report Abuse

Philip, I am sorry to say that yr presentation is an incomplete analysis unlike PUNTER's. He has commented unbiasedly on the strength of GCB and warned of its potential key risks. I have gone through yr points many times but is still unable to comprehend what you are trying to say. So, I will continue to invest in this wonderful company. In the meantime, I will eat chocolate and sip choco milk while waiting for it to appreciate in price.....

Posted by (US/CHN trade war doesn't matter) Philip > 2019-05-19 11:00 | Report Abuse

Hi lmy059c, let me give you a clear cut example of my thought process.

The biggest cocoa grinder in the world is Barry callebaut with 1.7 million tonnes of cocoa produced every year.
The second biggest is olam producing 900k tonnes per year.
Cargill grinds 800k tonnes per year.
GCB is 4th biggest producing 250k tonnes per year.
JB foods produces 180k tonnes per year.

Now that Malaysia produces very little cocoa, majority of it comes from Cote dvoire and African countries. Meaning imports and currency changes(2014 losses) are a huge risk for GCB, the " biggest" cocoa GRINDER in Asia.

Notice how I highlighted grinder. They work with low margins historically because of high competition. Do you know what is the market size of cocoa?

Grinders and confectionery companies are two very different things.

Top 10 Largest Chocolate Companies in the World 2018 Rank Companies 2017 Net Sales (US$ billion) 1 Mars Wrigley Confectionery (USA) 18 2 Ferrero Group (Luxembourg / Italy) 12 3 Mondelēz International (USA) 11.6 4 Meiji Co Ltd (Japan) 9.7 5 Nestlé SA (Switzerland) 8.8 6 Hershey Co (USA) 7.5 7 Lindt & Sprüngli AG (Switzerland) 4.1 8 Ezaki Glico Co Ltd (Japan) 3.2 9 Arcor (Argentina) 3.1 10 Pladis (UK) 2.8 Source: ICCO

They have higher margins because of brand recognition. More sales, and better growth opportunities.

All those grinders sell to Nestle. Nestle chooses the cheapest. Meaning the grinders are always competing to give the lowest prices and maintain minimum margins.

Nestle has 10-16% net profit margins. Meiji, ferero, Hershey, mondelez.
GCB historically works below 7% margins. Barry is 5% historically.

Now I'm not saying you can't make money in GCB. But you need to understand why Nestle can be 50pe while GCB is 10pe.

GCB does NOT sell chocolate or chocolate milk. They are raw materials processor.

Posted by (US/CHN trade war doesn't matter) Philip > 2019-05-19 14:46 | Report Abuse

If it was that easy to make your own chocolate brand they would have done it a long time ago. Very easy: if you start competing with your end users you end up like IQgroup (they moved from supplier to competitor then suddenly all their orders dried up).

Consider the problem. It is easy to make cocoa powder, dry it and ship it out. But if you start making a milo competitor, do you think Nestle will want to buy their raw materials from you?

Posted by (US/CHN trade war doesn't matter) Philip > 2019-05-19 14:51 | Report Abuse

that is what is known as a moat.

the moment GCB starts to rock the boat, it is easy for confectioners like Nestle etc to move to other sources of raw materials. Even Barry already owns KL Kepong Cocoa (KLK Cocoa), and are more than fit to take over and compete directly and import cocoa derivatives over.

Posted by lmy059c > 2019-05-19 14:52 | Report Abuse

Philip,thanks for yr lengthy reply. However, I still believe you have missed out one main point that is GCB is a small cap stock. So small yet to be able to become the 4th largest grinder in the world! Imagine that. Do u know that it is so small that its KLSE transactions have even been exempted from stamp duties ? Come onlah, how can u compare it with large cap companies? This type of comparison is like comparing u with Dr Mahathir (big man)….

Being a small cap company has its typical problems. That is why it needs to borrow in order to expand and hence the huge debt. GCB has expanded its operation overseas by having factories in Indonesia and Singapore. Maybe more in the pipeline. However, GCB is managing well with the borrowing as correctly highlighted by PUNTER.

As for the existing GCB investors, many have made profits because GCB shares registered its all time high a few weeks back. Our euphoria was somehow dented by your comments which we view as prejudiced, biased and unfair to small cap companies. Do u know that Warren Buffet and Peter Lynch have made lots of money investing in small cap stocks? Similarly, we hope and pray GCB is also another small cap jewel.....

Posted by qqq3 > 2019-05-19 14:58 | Report Abuse

sounds like a typical boring company to me.......where is the oomp?

Posted by (US/CHN trade war doesn't matter) Philip > 2019-05-19 15:04 | Report Abuse

I am interested to know which investments in small caps have WB bought? Hopefully you can enlighten me. In either case, there is no harm buying smaller cap stocks, but it must be done within context. If you buy small cap stock willy nilly, on average you will not do well.

I believe you should only buy smallcaps with a competitive advantage, or moats. but GCB at 2 billion is not really a small cap, I have recently invested a small amount in GKENT which is even smaller. But my "bias" there is based around the limited number of companies with successful LRT deployment which is local Malaysia company accepted by both UMNO and recent PH government (a small 500m company winning a 16.6 billion contract).

that aside, may I know why you buy and believe in GCB? As I am not a shareholder but I follow GCB and its peers closely, do you believe they can maintain or increase their high net profits (even while the latest financial report from director says consolidation and competition will dampen this ability), and what do you think they are currently doing right now better than the other rivals?

>>>>>>>

Do u know that Warren Buffet and Peter Lynch have made lots of money investing in small cap stocks?

Posted by Heavenly PUNTER Research IB > 2019-05-19 16:50 | Report Abuse

sorry to say, Cadbury is not even chocolate.... They call it chocolate but it's just bunch of flavouring & sugar. You want real chocolate, you need to try Lindt's.

Posted by qqq3 > 2019-05-19 20:19 | Report Abuse

I am a trader looking for oomph, no oomph no trade.

For investors.....better learn to say No more often. Otherwise investing no use.....investing should be participating in the growth of excellent companies.

Posted by qqq3 > 2019-05-19 20:19 | Report Abuse

Bursa got at least 85 % wasting time stocks.....

Posted by qqq3 > 2019-05-19 20:23 | Report Abuse

all things being equal, I prefer Bursa....Not familiar no do is good advice.

Posted by qqq3 > 2019-05-19 20:26 | Report Abuse

if u keep go looking for new stocks, u will keep lowering your standards......no need one.....

Posted by qqq3 > 2019-05-19 20:36 | Report Abuse

I want oomp I also want familiar......tough conditions......never mind....I do it my way.

Posted by qqq3 > 2019-05-19 20:47 | Report Abuse

can be a contrarian can so make a lot of money, important is to be familiar...and timing.

Posted by qqq3 > 2019-05-19 20:47 | Report Abuse

can be a contrarian can also make a lot of money, important is to be familiar...and timing.

Posted by qqq3 > 2019-05-19 22:04 | Report Abuse

lmy.....its not Trump is powerful..............its the Office of the white house that is powerful................

Posted by qqq3 > 2019-05-19 22:31 | Report Abuse

haha i thought u pointed me to a pro trump website.

Posted by Lukey_Greek > 2019-05-19 22:43 | Report Abuse

Economy of scale is a moat, especially in a low margin business that only requires simple technology. It is similar like top glove.

Posted by lmy059c > 2019-05-19 22:55 | Report Abuse

(Corrected) The website is www.pinnacledigest.com/pinnacle-tv/warren-buffet

Posted by qqq3 > 2019-05-20 00:15 | Report Abuse

lmy059c > May 19, 2019 10:55 PM | Report Abuse

(Corrected) The website is www.pinnacledigest.com/pinnacle-tv/warren-buffet

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that is the CFA world, not Heavenly PUNTER Research IB world.