Guan Chong Bhd (+ve)

SHARES in Guan Chong Bhd (fundamental: 0.9/3, valuation: 1.5/3) triggered our momentum algorithm yesterday for the first time since November last year.

The counter closed up seven sen or 1.76% at RM4.04 yesterday, with a volume of 2.69 million shares, exceeding its 200-day average volume of 623,167 shares. Over the past year, the stock has doubled in value from RM2.

The cocoa grinder last month announced it is setting aside up to €60 million (RM276.8 million) to build a new cocoa bean processing plant in West Africa over the next 18 months.

The plant will be located in Ivory Coast 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. Guan Chong currently has a combined grinding capacity of 250,000 tonnes per annum. At the current share price, Guan Chong is trading at 2.5 times its book value.