KUALA LUMPUR (June 2): AmInvestment Bank Research has maintained its “Buy” rating on Guan Chong Bhd (GCB) at RM3.02 with a higher fair value (FV) of RM3.43 (from RM3.20) as the research house increased its PE multiple from 13x to 15x, which is at a discount to its international peers.

In a note today, AmInvestment said this is to reflect the higher PE for its international peers of 21x (19x previously) as well as the synergistic value that Schokinag Holdings GMBH brings to the group.

“However, we are trimming our earnings forecasts to account for the adverse impact from the Covid-19 pandemic and the implementation of Living Income Differential on Ivory Coast and Ghana cocoa beans.

“We lower earnings forecasts by 7% for FY21F and 6% for FY22F. We also reduce our FY21F EBITDA yield assumption (after taking out contribution from Schokinag) to RM1,240–RM1,250 per MT from RM1,290/tonne,” it said.

The research house said the Covid-19 pandemic has impacted the demand for premium chocolate, which typically uses more cocoa butter ingredient.

“This was partly attributed to the severity of the outbreak in key markets (Europe, the US) as well as the disruption to the tourism industry, which makes up a part of high-end chocolate consumption.

“On the other hand, consumption of normal chocolate remained resilient,” it said.