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Guan Chong plans RM278m new cocoa bean processing plant in Africa

TheEdge Sat, Aug 31, 2019 01:42am - 9 months ago

KUALA LUMPUR (Aug 30): Cocoa grinder Guan Chong Bhd, whose share price has jumped over 73% in the past 12 months as it reports stonger earnings, has set aside up to €60 million (about RM278 million) to build a new cocoa bean processing plant in Africa over the next 18 months.

The plant will be located in Côte d'Ivoire and is expected to be commissioned and operational by the first quarter of 2021, which is expected to raise its production capacity by 60,000 tonnes per annum and allow Guan Chong to expand its market presence and strengthen its competitive advantage in the European market.

“In addition, the new plant will be processing cocoa beans directly sourced from within Côte d'Ivoire, being one the world’s largest cocoa beans producers, which will in turn enable the company to achieve savings in freight/transportation costs,” it added.

Guan Chong currently has a combined grinding capacity of 250,000 tonnes per annum, of which 130,000 tonnes comes from its two factories in Pasir Gudang, Johor, while 120,000 tonnes come from its plant in Batam, Indonesia.

The group said investment in the new plant is expected to be funded via internally-generated funds, bank borrowings, and/or proceeds from a proposed private placement exercise.

Last week, Guan Chong announced that its net profit jumped 42% year-on-year to RM60.1 million or 12.77 sen per share in its second quarter ended June 30, 2019 (2QFY19), on higher sales volume of cocoa products, which pushed revenue up 53% to RM753.06 million. In contrast, the group posted a net profit of RM43.03 million or 9.01 sen per share in the same period last year, when revenue was RM491.58 million.

The stronger 2QFY19 profit pushed its cumulative net profit for the first six months of FY19 up 39% y-o-y to RM114.14 million or 23.89 sen per share, from RM82.36 million or 17.24 sen per share. Revenue climbed at the same rate to RM1.4 billion from RM1.01 billion.
Guan Chong's shares closed unchanged at RM3.95 today, giving it a market capitalisation of RM1.89 billion. A year ago, it was trading at RM2.28 apiece.

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