i bought lot 100 to eat and it taste ordinary, nothing special. i also bought cocopie, the taste not so nice. and i notice cocopie is slightly cover by dust, seem like long time no one touch.
Ah Ha, doesn't make sense. This was the research report just a few months ago.
YTD 10 FY16 local sales value increased 12%. YTD 1Q FY16 operating margins came in at 16.5% vs 15.7% in YTD 10 2015. We expect operating margins of 14-18% to prevail over the next several quarters. Cocoaland has been taking steps to raise margins and is making good progress under very chal-lenging trading conditions. Exports account for about 52.5% of Cocoaland sales currently; however China demand is visibly slowing, so we have guided our sales forecast a bit lower. 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 Major Shareholders (%) Leverage Success Sdn Bhd 38 0 Fraser & Neave Holdings Bhd 27.2 Tan Booi Charn 2.6 FTSE-BURSA INDEX MEMBERSHIP FBMKLCI 70 R3M I3A R3M HU RAH No No Yes No REPORT INDEX We maintain our BUY recommendation on Cocoaland Holdings Bhd, but reduce our fair value estimate slightly to MYR 2.60. It is possible that the share price will surprise on the upside; sales growth and capacity utili-sation may accelerate more quickly than we expect. Cocoaland has very little debt on the balance sheet as well as plenty of cash. Cocoaland has a clean balance sheet and a proven record of growing export sales (see page 5). Own brand exports are growing very strongly; and own brand margins are higher than OEM margins, implying more upside to profits. China/HK remains in the top spot as the company's largest export market, followed by Saudi Arabia in importance. Mean-while, management has been very diligent in developing the local market. Local sales rose about 12% YTD 10 2016 vs 10 YTD 2015. COMPANY PROFILE Cocoaland Holdings Bhd is ranked approximately in the middle of the thirty listed companies in the Malaysian snack food industry. The com-pany is one of the few home grown Malaysian consumer firms that have successfully penetrated regional markets. Cocoaland Holding's pred-ecessor company, MFESB, was formed in 1980. This company and others were consolidated and converted to a public limited company in 2000 under the name Cocoaland Holdings Bhd, prior to listing in 2005.
Though Cocoland has made very good progress developing its export markets over the years, the slowdown in global trade has made itself felt even in the resilient snacks market. The demand slowdown in China is directly affecting demand for all sorts of Malaysian exports, ranging from electronic parts to palm oil. Consequently, export sales at Cocoloand are likely to remain soft for a few quarters. There are still a few pockets of export growth, but odds are that total export growth will be subdued. Like any well run company, Cocoaland is not simply sitting on its hands. Local sales grew 12% YTD 10 2016 vs YTD 1C) 2015 - an impressive achievement, especially when compared with the results of many other companies which have recently reported. In addition, Cocoaland has been making steady progress in Singapore, which is now a lop five' export market. Cocoaland has plans to build an additional factory in Rawang, bringing the total number of factories to seven. This new factory will come on line in 2018. Also, Cocoaland will invest another MYR 5-10 mn in packing machines to increase production capacity. Meanwhile, Cocoaland has been making impressive progress selling its 'own brand' products in China/HK and the Middle East. YTD 10 2016 own brand sales accounted for about 64% of export sales, up from 54% YTD 1C) 2015. Cocoaland's management has made commendable progress in growing new markets under very challenging conditions whilst maintaining very respectable margins. Looking ahead, we expect sales growth rates to range between 0-3% pa as the outlook for growth in Asia and elsewhere is softening. Investors should expect more bumps ahead, but any short term weakness in the share price may be prove a useful buying opportunity. USDMYR rates appear to be softening again, and thus exports may perk up a bit. Cocoaland has been fairly successful in growing its overseas sales as shown by the table below. This is quite encouraging for the medium and long term as the company's export market is potentially many times the size of its domestic market. There are very few 'home grown' companies in Malaysia that achieved the record of consistent export success shown below.
"Cocoaland Holdings Bhd executive director Lau Kee Von told The Edge Financial Daily that an increase in sugar price will have an impact on sugar-related food manufacturers, but it may not be significant for Cocoaland as the company’s pricing is based on international sugar prices.
Lau said major food exporters like Cocoaland have been trading sugar based on international prices instead of the government-controlled price.
He said companies that buy sugar based on the government-controlled price are mostly for local consumption, and they normally comprise small and medium enterprises. (SMEs).
Lau also noted that unlike most commodities, which saw their prices trending down, the raw sugar price has gone up this year. However, he said it is difficult to say whether the move by the government to raise the price now is justified."
Several consumer goods in talks to buy malaysian based cocoaland the Wall Street Journal reported on Sept. 15. The financial terms of the deal were not disclosed, citing people familiar with the matter. Cocoaland deserves a premium valuation due to its attractive dividend yields of 4%, debt free position, strong brand value and rising global position. Its valuations are also supported by its position as a takeover target and exporter in a defensive sector (F&B).
KUALA LUMPUR: After being the subject of two failed takeover bids last year, snacks and candy maker Cocoaland Holdings Bhd said it will not consider anymore takeover offers — at least for now — and will concentrate instead on expanding its business.
“We are not considering anymore offers now as we don’t think we can get a good price under the current prevailing market condition,” said its executive director (ED) Lau Kee Von in a recent interview with The Edge Financial Daily.
“It would be a waste of time for us to spend our time discussing another takeover offer, which may turn out to be nothing eventually,” Lau said.
Hence, he said it would be better for him and his eight siblings to focus on their business and expand the company’s market share. He also gave assurance that there is no need to worry about the company’s succession plan.
“My youngest brother is only 40 years old and each of us has several children that we can groom to take over the business,” Lau said, although he admitted that none of the second generation had expressed their interest in taking over the business so far.
Cocoaland is controlled by Leverage Success Sdn Bhd, which has a 38% stake. The shareholders of Leverage Success are Lau and his brothers Liew Fook Meng, Liew Yoon Kee, Lau Pak Lam, Lew Foo Chay @ Lau Foo Chay and Lau Kwai Choon.
The second-largest shareholder of Cocoaland is Fraser & Neave Holdings Bhd, with a 27.19% stake.
Since 2014, Cocoaland’s management has been on the lookout for buyers to take over the company, citing the lack of successors to take over the business.
News reports in April 2015 said it was in talks with Swedish private equity group EQT Partners to dispose of a controlling stake in the company, though no firm offers were disclosed.
On the heels of that, the company received a takeover offer amounting to RM377.52 million or RM2.20 per share from Navis Asia Fund VII, LP. But the board decided to reject the offer in May that year.
A month later, it got a takeover offer from Hong Kong-listed First Pacific Co Ltd to acquire its entire business for RM2.70 per share or RM463.32 million, cash. But First Pacific, which is controlled by Indonesian tycoon Anthony Salim, withdrew its offer a month later, saying Cocoaland’s product range did not meet its overall regional food expansion plans.
Meanwhile, Lau shared Cocoaland will introduce a new series of “healthy” gummy candies — including collagen gummy, vitamic C gummy, multivitamin gummy and a calcium gummy — in the domestic market by the first quarter of 2017.
This, he said, is to tap the middle to higher-end market segments, where the company has no presence currently, and to capture more market share as consumers become more health-conscious.
More interestingly, Lau said the company plans to sell the new gummy candies solely on a new e-commerce platform to be established, eschewing the usual supermarket channel.
“The costs of production for the new products are relatively higher compared with normal gummy products. To keep the price affordable, we think it would be good to sell them via the online platform,” he explained.
The platform is in the making, he said, and should be ready early next year. However, he declined to share the capital outlay required for the new product range and e-commerce platform, or any expected sales figure.
For the first half ended June 30, 2016 (1HFY16), its net profit gained 20% year-on-year to RM18.67 million from RM15.56 million due to lower freight and forwarding charges and foreign exchange gain, while revenue stayed largely flat at RM129.89 million compared with RM129.41 million previously.
Aside from expanding its local market, Lau said the company will intensify its advertising and promotion campaign in China to capture more market share.
“We have now established our presence in almost every province in China,” he said. The company hopes to see between 10% and 20% sales growth in the country each year.
Besides China, which is its biggest overseas market, Cocoaland is also exporting its products to the Middle East, Indonesia, the US and Europe.
In a report dated Aug 29, 2016, Wilson & York Global Advisers Sdn Bhd maintained its “buy” call on Cocoaland, with a higher target price of RM2.78 from RM2.60 previously, after projecting that the company’s sales growth and capacity utilisation may accelerate faster than expected.
The research outfit also noted that the gummy and jelly maker is shifting to its own brand products, which have been beneficial for margins, citing the 12.7% jump in local sales value in 1HFY16.
Though it expects annual sales growth to be muted (0% to 3%) for the next few quarters as growth outlook in Asia and elsewhere softens, it said any short-term weakness in Cocoaland’s share price may be a good chance to buy.
Cocoaland shares closed down one sen or 0.51% at RM1.95 last Friday, valuing it at RM446.16 million.
Cocoaland is currently trading at undemanding FY16- FY18F PEs of 12-14x, which are below the group's 5- year mean of 17x. We think that Cocoaland deserves a premium valuation due to its 4% attractive dividend yields, debt-free balance sheet, and strong brand value and rising global position.
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Posted by kiasuinvestor > 2016-05-06 18:41 | Report Abuse
i bought lot 100 to eat and it taste ordinary, nothing special. i also bought cocopie, the taste not so nice. and i notice cocopie is slightly cover by dust, seem like long time no one touch.