KUALA LUMPUR: AmInvestment Bank research remains positive on Guang Chong Bhd for its growth potential although it trimmed its earnings forecast for FY20 to account for a delay in the Ivory Coast expansion plan and impact from the Covid-19 lockdowns.

"Moving forward, the group expects a challenging business environment due to impact of Living Income Differential (LID) implementation and Covid-19 outbreak.

"Lockdowns implemented worldwide has resulted in a slowdown of economy and shrunk the demand of chocolate consumption," said the research house, which has a "buy" call on the counter.

AmInvestment trimmed earnings forecasts by 2.4% for FY20 and 8.3% for FY21 due to the negative developments despite the recent first quarter earnings meeting expectations.

Consequently, it lowered its fair value slightly to RM3.20 a share from RM3.22 previously.

Revenue for the quarter rose 40% year-on-year (y-o-y) due to the contribution from newly acquired Schokinag Holding GMBH. Excluding the contribution, revenue was up 10% y-o-t, due to the higher selling price of cocoa products.

The research house said the the group's core net profit of RM82.4mil in 1Q made up 35% of its full-year estimate, a gain that it had accounted for in an earlier report.

Starting in the second half of FY21 however, AmInvestment expects an earnings recovery to take place, and forecast 7% growth in FY21 and 26% in FY22.

It said that the group remains confident over its long-term prospects and uptrend in future chocolate demand remain intact.