After moving side way for the past 6 week, it is encouraging to see some strong persistent buying yesterday. it seems like something is brewing in this company from the accumulation of the shares by the banker during the past few months. It is very likely the share price will move up to new heights in the coming days, hopefully.
Cocoaland Industry Sdn Bhd (“CISB”), a wholly-owned subsidiary of Cocoaland Holdings Berhad (“Cocoaland”), has been served with a letter from the Inland Revenue Board of Malaysia (“IRB”) dated on 19 October 2017 pertaining to the initial tax audit findings for the years of assessment 2010 to 2014 showing an additional income tax of RM4,059,479.73 and 45% penalty of RM1,826,765.88 totalling RM5,886,245.61 http://www.theedgemarkets.com/article/cocoaland-slapped-rm589m-additional-tax-irb
Cocoaland Holdings Buy Target Price: MYR3.10 Price: MYR2.65 Yummy Gummy Market Cap: MYR606m Bloomberg Ticker: COLA MK We initiate coverage on Cocoaland with a BUY recommendation and TP of MYR3.10 (20% upside including dividend yield). Its range of gummy products has continued to grow, prompting the group to expand its production capacity to capture rising demand – this supports its longerterm earnings growth. Backed by a sturdy balance sheet, dividend yield is forecasted at 3.4-4.2% during FY18F-20F. The stock is trading at a 30% discount to sector average, which we believe is unjustified given the encouraging growth of its gummy products and solid fundamentals. Share Data Avg Daily Turnover (MYR/USD) 0.22m/0.05m 52-wk Price low/high (MYR) 2.01 - 3.16 Free Float (%) 25 Shares outstanding (m) @MYR1 par 229 Expected Share Price Return 17% Expected Dividend Return 3% Expected Total Return 20% Shareholders (%) Leverage Success SB 38.0 Fraser & Neave Holdings Bhd 27.2 Share Performance (%) YTD 1m 3m 6m 12m Absolute 1.5 (3.3) (3.6) (16.1) 30.5 Relative 1.7 (7.9) (5.4) (17.8) 21.7 Source: Bloomberg 92 111 130 148 1.8 2.3 2.8 3.3 Cocoaland Holdings (COLA MK) Price Close Relative to FTSE Bursa Malaysia KLCI Index (RHS) 2 2 1 1 1 1 1 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Vol m Source: Bloomberg Additional Data Bursa Code 7205 Listing Market Main Beta 0.5 3-Month Average Volume (‘000) 87.1 ROA (%) 12 Manufacturer of choice. Cocoaland Holdings (Cocoaland) has close to 40 years of experience in food manufacturing. The group was listed on the Second Board of Bursa Malaysia in 2005, and has since delivered an uninterrupted earnings record. Its in-house products have strong brand equity in the domestic market and are also popular in foreign countries. Besides, the group has expertise in contract manufacturing, serving several reputable MNC clients. Gummy spearheading growth. Cocoaland’s revenue has grown at a 5-year CAGR of 9.4% to MYR272.6m in FY16. We believe the commendable sales performance was mainly driven by robust demand for its gummy products. Moving forward, the group is planning to add a new production line to capture rising demand. OEM and exports providing additional boost. Original equipment manufacturer (OEM) or contract manufacturing has contributed significantly to Cocoaland’s topline, helping to support its production utilisation rate and thus generating economies of scale. On top of that, the experience in manufacturing for high-profile customers has enhanced its reputation and track record. Meanwhile, the diversification into foreign markets bodes well for Cocoaland given the additional revenue stream and more sizeable growth potential. Generous dividends backed by sturdy balance sheet. Cocoaland has been generous in rewarding its shareholders with dividends, thanks to healthy cash flow generation and minimal capex. It has a sturdy balance sheet with net cash of MYR78.6m or MYR0.34/share as at end-3Q17. We believe the dividend payout can be sustained and we are forecasting DPS of MYR0.09, MYR0.10, and MYR0.11 during FY17-19F, which translate into decent yields of 3.4-4.2%. Initiate coverage with TP of MYR3.10. Our TP is based on FY18F P/E of 18x, on par with +1.5SD over its 5-year mean and represents a c.15% discount to the sector average given Cocoaland’s smaller market capitalisation and profit base. The stock is currently trading at FY18F P/E of 15.4x or 30% discount to the sector average, which we believe is unjustified given the encouraging growth of its key gummy products and solid fundamentals. Risks to our recommendation include potential M&A acquisitions and sharper-than-expected rise in input costs.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Teh CG
3 posts
Posted by Teh CG > 2017-06-23 16:49 | Report Abuse
haha... this go north. rm4 should hit by yearend.