Showing posts with label cocoaland. Show all posts
Showing posts with label cocoaland. Show all posts

Thursday 1 November 2012

Success is sweet for Cocoaland


Saturday October 27, 2012

By CHOONG EN HAN
han@thestar.com.my

Cocoaland Bhd sees its best bet of expanding the business onto the next plateau of growth through organic means as it is spurred by the growing consumer consumption for sugar confectionary candies.
In an interview with StarBizWeek, founder and executive director Liew Fook Meng says that the company's expansion plans for the next few years would open up new capacity for the company to fill and also to leverage on the strength of its substantial shareholder, F&N Holdings Bhd for its beverage business.
“The additional capacity would free up the bottleneck that we have currently as sometimes we are faced by supply constraints when demand picks up,” he says.
Besides planning to spend about RM30mil to set up its sixth factory in Rawang, the company would invest about RM44mil to increase production of its hard candy and fruit gummy confectionery.
This will more than double its total production capacity to 4.6 million kg of hard candy and 11.7 million kg of fruit gummy from the current capacity of one million kg and 4.5 million kg respectively.
In the meantime, Liew is setting his eyes on the bigger picture now and is following closely the developments of the takeover of Singapore-listed F&N by Thai Beverage Plc, one of the largest beverage producers in Asia.
Liew: ‘The additional capacity would free up the bottleneck that we have currently.’Liew: ‘The additional capacity would free up the bottleneck that we have currently.’
With F&N as its penultimate strategic partner with a 27% stake via F&N Holdings, the developments would have an impact the direction of the company.
Plans are afoot for the group to set up its franchise business model which would see Cocoaland manufacturing and marketing its products under the franchisor's brand name.
“We are still in the negotiation stage with a few well-known international companies, and we expect to sign up a few franchise businesses to start in financial year 2013 after the new lines for gummy and hard candy have been fully-installed and commercialised,” he says.
While Cocoaland is now synonymous with its fruit gummy products under the Lot 100 brand, and its partnership with F&N, the company is looking out for partnerships and work with other food brands.
“Besides F&N, we currently have other clients like GlaxoSmithKline,Ribena21st Century, and Coffeebean. We intend to increase penetration in export markets like China, Vietnam and Indonesia with our fruit gummy and CocoPie products,” he says. A wide range of its products are carried by local retail stores, and besides the domestic market, the group has been supplying confectionery to overseas market such as the United States, Japan, Middle East, Hong Kong, Australia and Europe.
The export market's share to the group's overall revenue has increased progressively from 46.5% in financial year 2009 to 54.2% in the first half of 2012.
Cocoaland has a market capitalisation of about RM400mil, and its journey has been one that is synonymous with other success stories.Cocoaland story began when two brothers started out as small time vendors selling deep-fried snacks and banana fritters in the Klang Valley.They got their first break when an acquaintance decided to dispose of his chocolate coating operations.
“That time we don't even have a name yet. And with RM10,000 in hand, we bought his machines and decided to venture into that business,” he says.
The brothers finally got their first break in the mid-1980s when they carved a niche for themselves in the market to manufacture polytubed drinks, which opened doors to the overseas market, and for the first time exporting to the Middle East.
The first factory was set up in Kampar in the 1980s and the second success story came in the form of “Koko Jelly” with its second factory in Kepong to manufacture the chocolate coated jelly that was well-received by the public. Today, the group is managed by 10 siblings.
AmResearch recently reaafirmed its “buy” call on the company, with a higher fair value of RM3.05 per share as it says the group is poised to hit an earnings inflexion point.
It says the group's three-year compounded annual growth rate of 28% will be underpinned by additional production capacities and the deepening in distribution channels.
“We understand plans are afoot for the installation of a new line each for the production of hard candy and fruit gummy to alleviate current supply constraint. Upon commercialisation by first quarter 2013, the new lines are expected to lift installed capacities by 360% for hard candies and 160% for gummies. This potentially translates into an additional RM158mil of revenue per annum,” it says.
For its first half ended June, the company recorded a revenue of RM110.74mil, passing the halfway mark of what it achieved for the entire 2011 at RM173.9mil. Net profit stood at RM12.2mil for the period under review, more than half its net profit of RM19.19mil for year ended 2011.
Its net profit was halved in 2010 to RM9.8mil from RM19.6mil previously due to slower sales, and losses it incurred after terminating a joint-venture production facility in China's Fujian province to manufacture fruit gummy for the China market.

Tuesday 28 February 2012

Cocoaland (At a Glance)









Announcement
Date
Financial
Yr. End
QtrPeriod EndRevenue
RM '000
Profit/Lost
RM'000
EPSAmended
27-Feb-1231-Dec-11431-Dec-1151,4018,7175.08-
22-Nov-1131-Dec-11330-Sep-1139,9212,8851.68-
25-Aug-1131-Dec-11230-Jun-1143,6744,2312.47-
23-May-1131-Dec-11131-Mar-1138,9983,3591.96-

Announcement
Date
Financial
Yr. End
QtrPeriod EndRevenue
RM '000
Profit/Lost
RM'000
EPSAmended
27-Feb-1131-Dec-10431-Dec-1038,4454,2861.90-
22-Nov-1031-Dec-10330-Sep-1037,2904370.34-
25-Aug-1031-Dec-10230-Jun-1031,3171,0140.79-
23-May-1031-Dec-10131-Mar-1035,2074,0823.40-



ttm-EPS
2011  11.19 sen
2012    7.39 sen
YoY change +51.4%

Dividend
2011   5.50 sen
2010   4.40 sen
YoY change +25%

Net assets per share
2011  RM  1.100
2010  RM  1.030
YoY change +7.8%

Total Revenue 173.994m
PAT  19.192m
Total Assets  219.050m
Total Equity  188.670m

Cash & Equivalents  42.986m
LT Borrowings   0
ST Borrowings  0

CA  118.006m
CL  30.307m

Inventories  25.336m
Trade receivables  40.904m
Trade Payables 22.768m

OPBWCC  27.438m
Net CFO  9.349m
Capex (PPE)  (30.739m)

Ordinary Shares of RM 0.50 each
2011  171.600m
2010  132.891m


Valuations

Price  RM 2.39 per share
Market capitalisation  410.1m

ttm-PE  21.4x
DPO  0.49
DY  2.3%


Net Profit Margin  11%
Asset Turnover  0.794x
Financial Leverage  1.16x

ROA 8.7%
ROCE  8.3%
ROE  10.1%



Review of Performance 
In the financial period under review, the Group posted a 22% year-on-year revenue growth from RM142.3 million to RM174.0 million; this was mainly due to increased selling price and trading volume of our Fruit Gummy and Beverage production lines.  However, during the year, the Malaysian Ringgit has also been steadily strengthening against the US dollar. Consequently the impact of increased selling price on revenue growth was partially negated by the stronger Malaysian Ringgit.

The Group achieved profit before taxation of RM21.7 million, an increase of RM13.4 million or 161% from the previous corresponding period. This improvement in profit was attributable to the increase of sales revenue and production efficiency, especially from the Beverage section, which the Group incurred substantial startup cost during last financial year, higher fixed deposit interest received coupled with lower operating cost during the current period.





Stock Performance Chart for Cocoaland Holdings Bhd


Business Description:
Cocoaland Holdings Bhd operates in the Candy & other confectionery products sector. Cocoaland Holdings Berhad (Cocoaland) is an investment holding company. 

The Company operates in the business of manufacturing and trading of processed and preserved foods and other related foodstuffs. The Company's products include candy, canister, cookies, drinks, gummy, hamper, juice, pudding and jelly, snack and wafer. 

Cocoaland's subsidiaries include 
  • Cocoaland Industry Sdn Bhd, which is engaged in manufacturing and trading of processed and preserved foods and fruits of all kinds; 
  • L.B. Food Sdn Bhd, which is engaged in the wholesale and retail of processed and preserved foods; 
  • B Plus Q Sdn Bhd, a manufacturer of fruit juice and foodstuffs; 
  • Greenhome Marketing Sdn. Bhd., which is engaged in the marketing, trading and distributing of all kinds of beverages and foodstuff; 
  • Lot 100 Food Co. Ltd., which is engaged in the wholesaling, import and export of gummy products and other product, and 
  • M.I.T.E. Food Enterprise Sdn Bhd, which is engaged in trading and distribution of foodstuffs. 

Monday 7 March 2011

Cocoa crunch

Cocoa crunch


Written by Chong Jin Hun
Monday, 07 March 2011 11:45


KUALA LUMPUR: Having a cup of nicely brewed coffee and a chocolate brownie for your afternoon tea break could soon be an expensive affair should the price of coffee and cocoa beans continue to rise.

Costlier coffee and cocoa beans are also eating into the profit margins of the food and beverage (F&B) manufacturers beyond putting a squeeze on consumers’ wallets.

Against such a backdrop, some of the consumer stocks on Bursa Malaysia — long considered sound defensive picks — are becoming less safe due to the looming margin squeeze and weaker demand as their products get more expensive.

Already, these companies, including names like Nestle (M) Bhd, Cocoaland Holdings Bhd, London Biscuits Bhd and Apollo Food Holdings Bhd, have reported weaker quarterly results due to higher input costs.

Cocoa prices rose to a 32-year high at US$3,706 (RM11,230) a tonne last week due to the ongoing political crisis in Ivory Coast, which produces 60% of the world’s output. The commodity has rebounded 46% from a low of US$2,543 a tonne in June, 2009.

Meanwhile, supply fears pushed the price of coffee to a high of US$2.74 (RM8.30) a pound in February, more than double the low of US$1.27 a pound seen in March 2009. Concerns over poor harvests in coffee producing countries like Mexico, Colombia and Kenya have been exerting upward pressure on prices.

Nestle’s net profit for 4QFY10 ended Dec 31, plunged 54% to RM39.3 million from RM86.2 million in the corresponding period a year ago, despite higher revenue of RM963.9 million versus RM950.6 million. The group attributes the profit contraction to the sharp increase in cocoa and milk prices that dented its gross margin.

Nestle says the average price of cocoa powder more than doubled in 2010 compared with the previous year, while the price of skimmed milk powder rose about 20%.

“The sharp increase in global commodity prices and the government’s gradual reduction in food and fuel subsidies, which puts pressure on the group’s input costs, remains a concern.

“The group will continue to closely monitor the development of commodity prices, evaluate and adjust its pricing policy accordingly,” Nestle said in its results briefing.

Where possible, Nestle says it will use operational efficiencies and cost-saving measures to avoid passing on the price increases to consumers.

To mitigate the cost pressures, Nestle raised prices for some of its products last month. The price of Milo Fuze and powder products have gone up by between 5% and 6%, while the price for the Nescafe three-in-one product is up by 4%.

Nestlé is seen as a reference point when it comes to raising prices, analysts and industry observers say. Other food manufacturers are expected to follow in Nestle’s footsteps.

Tai Chun Wah, Cocoaland’s group accountant, says rising cocoa bean prices will crimp the company’s bottom line in the short term.

Tai says the manufacturer, which produces chocolate confectioneries, will pass the additional cost to consumers within six months.

“In the short term, the higher inputs costs will reduce profits,” Tai says.

Cocoaland’s net profit halved to RM9.52 million for FY2010 ended Dec 31. In its latest quarterly result announcement, Cocoaland warned that it faces greater challenges ahead in anticipation of higher raw material prices and intense competition in domestic and overseas markets.

Tai believes that raising selling prices is an emerging trend as big players like Nestle have started to do so. “Consumers have to accept it,” he says.

He adds that he expects cocoa prices to rise further due to supply concerns.

London Biscuits said in its results announcement for 2Q ended Dec 31, that it expects its financial year ending June 30, will be another challenging year. The confectioner reported a 76% plunge in net profit to RM1.08 million for the quarter.

Apollo, meanwhile, saw its net profit decline 31% to RM3.95 million in 2Q2010 ended Oct 31. It attributes this to higher operating costs and lower gains from the disposal of available-for-sale financial assets.

“Despite the improvement in the global and domestic economy, the group’s operating environment is expected to remain challenging and competitive,” the company said in notes accompanying its quarterly numbers.

While the F&B companies are feeling the bite of high commodity prices, there is a liver lining for some, as Malaysia is a producer of cocoa, though not a major one.

Malaysia produced 18,152 tonnes of cocoa beans in 2009, according to the Malaysia Cocoa Board. Of this amount, 13,213 tonnes came from Peninsular Malaysia, 3,688 tonnes from Sabah and 1,251 tonnes from Sarawak. Production is estimated to have fallen to 15,654 tonnes in 2010.

Malaysia’s cocoa bean production is mostly undertaken by smallholders, rather than large plantation players, and these smallholders will benefit from higher prices.

The country’s cocoa production has declined greatly as low prices in the past prompted farmers to switch to more lucrative crops. In 1990, for instance, the country produced 247,000 tonnes -- a staggering 13.6 times more than 2009’s output.

Guan Chong Bhd, a cocoa-ingredient producer, is riding the rally in cocoa prices. It is sitting on a large inventory of cocoa beans that has appreciated in value due to rising prices. The company’s inventories totalled RM154.92 million as at end-2010

“We can buy high and sell high,” says Brandon Tay Hoe Lian, Guan Chong’s managing director and CEO. He adds that the company can always pass on additional costs to customers.

For FY2010 ended Dec 31, Guan Chong’s net profit soared seven-fold to RM100 million as revenue rose 83% to RM1.17 billion.

The company says its financials were also helped by foreign exchange gains due to the strengthening ringgit. The firm also booked gains from commodity futures contracts, and foreign exchange derivatives.

It is also worth watching companies like MBf Holdings Bhd, which operates coffee and cocoa plantations in Papua New Guinea.

MBf Holdings’ website indicates that the company has a 1,100ha coffee plantation and 2,100ha of land for tea cultivation in Papua New Guinea. Details about its cocoa operations were however not specified.

Agriculture operations in Papua New Guinea accounted for 11% of MBf’s revenue in the financial year ended Dec 31, 2010, its latest quarterly results showed.


This article appeared in The Edge Financial Daily, March 7, 2011.




Wednesday 22 December 2010

Price of hot chocolate to soar

Price of hot chocolate to soar
Just when it seemed the only respite from the bad weather was curling up in front of the fire with a mug of hot chocolate, there is more bad news.

Price of hot chocolate to soar
Photo: Philip Hollis
The price of hot chocolate is to soar after the wholesale cost of cocoa powder jumped by 32 per cent over the last year.
The rise has been blamed on failing crops earlier in the year and disruption from suppliers in Ivory Coast, whose traders suffered following a chaotic general election earlier. Specualtors have been adding to the problem by stocking up.
Cocoa powder as risen to £3,000 a ton a much bigger rise than cocoa butter which is used to make chocolate bars.
The figures were disclosed by commodities analyst Mintec for The Grocer magazine.
'The price of chocolate drinks is coming under pressure and cocoa powder and sugar become more expensive on the world markets," a spokesman for Mintec.
'Over the past few months the price of cocoa powder has been steadily increasing and sugar prices have followed suit propelling the price of chocolate raw materials to record levels.'
It added: 'As chocolate consumption is increasing faster than production, prices for raw materials might not ease quickly.'



http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8215194/Price-of-hot-chocolate-to-soar.html

Tuesday 7 December 2010

Cocoaland’s new product line to be postponed

Cocoaland’s new product line to be postponed
Posted on November 23, 2010, Tuesday

KUCHING: Candymaker, Cocoaland Holdings Bhd (Cocoaland) postponed its proposed Cocopie and Gummy line of products as it was still scouring for a new plant to accommodate the additional lines.

In its research report, TA Securities Holdings Bhd (TA Securities) said the lines were expected to be completed and up-and-running in a year’s time.

On another note, Cocoaland was still in the trial-testing stage for original equipment manufacturers (OEMs) with big multinational corporations (MNCs) and thus, none would be reflected in its earnings this year.

In addition, the company which had begun marketing its own brands Fruit Ten and Cha in the market had been met with mundane response.

This was probably expected, as Cocoaland’s brand name was still relatively new in the Fraser and Neave Holdings Bhd (F&N) and Yeo Hiap Seng (M) Bhd (Yeo’s) dominated market, according to the research house.

It also mentioned that product and brand recognition traditionally took two to three years, but with Cocoaland’s synergistic relationship with F&N, it might allow Cocoaland’s products a shorter time to achieve that milestone thanks to F&N’s wide distribution network.

Furthermore, the research firm also commented on the company’s skyrocketing costs. The average price of sugar had increased more than 30 per cent year-to-date, cocoa powder by more than 20 per cent, packaging by more than 10 per cent and glucose by more than 15 per cent.

This was only partially mitigated by the weaker US dollar since 40 per cent of its sales were denominated in US dollars. TA Securities stated that trends were moving towards passing the costs to the consumers in the form of increasing selling prices by five per cent to 10 per cent.

Given the current circumstances, the research house expected net profit to be less than RM10 million on the back of weak first half of the year results in addition to operating losses of its beverage plant.

It pegged Cocoaland’s target price at RM2.14 per share based on financial year 2011 price earnings ratio of 16 times.

http://www.theborneopost.com/?p=76611

Sunday 29 August 2010

F&N to subscribe 23.08% new Cocoaland shares at RM1.38 each

F&N to subscribe 23.08% new Cocoaland shares at RM1.38 each

Tags: Cocoaland | Fraser & Neave Holdings | new shares
Written by Joseph Chin
Thursday, 26 August 2010 11:45


KUALA LUMPUR: Fraser & Neave Holdings Bhd will subscribe for 39.5 million new COCOALAND HOLDINGS BHD [] shares or 23.08% at RM1.38 each.

This was sharply below Cocoaland’s last traded price of RM2.87, based on the announcement made by Cocoaland on Thursday, Aug 26. The acquisition of the shares would amount to RM54.64 million.

“The issue price of RM1.38 was arrived on a negotiated basis,” said Cocoaland. The issue price represents a price-to-book ratio of approximately 1.64 times and 1.57 times over the audited and unaudited consolidated net assets per share of Cocoaland of RM0.84 as at Dec 31, 2009 and 88 sen as at March 31, 2010 respectively.

“Having considered the rationale for the proposed subscription and the benefits from the entry of F&N as a key shareholder of Cocoaland, the board is of the opinion that the issue price is reasonable to Cocoaland,” it said.

Cocaland said the board believed this strategic tie-up with F&N will broaden the group’s growth prospects as well as open new horizons in terms of brand building, product and market development for Cocoaland Group.

“The board opines that having F&N as a strategic shareholder will generate greater shareholder value for Cocoaland,” it said.

http://www.theedgemalaysia.com/business-news/172534-fan-to-subscribe-2308-new-cocoaland-shares-at-rm138-each.html