Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Company Name: COCOALAND HOLDINGS BHD
| Research House: WILSON & YORK | Price Call: HOLD | Target Price: 2.18 |
Showing posts with label COCOLND. Show all posts
Showing posts with label COCOLND. Show all posts
June 2, 2014
March 5, 2014
Cocoaland Holdings Bhd RR 4Q FY 2013
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Company Name: COCOALAND HOLDINGS BHD
| Research House: WILSON & YORK | Price Call: BUY | Target Price: 2.48 |
September 3, 2013
Cocoaland Holdings Bhd RR 2Q FY 2013
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Company Name: COCOALAND HOLDINGS BHD
| Research House: WILSON & YORK | Price Call: HOLD | Target Price: 2.28 |
February 28, 2012
Cocoaland - Turnaround on strong 4Q
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Company Name: COCOALAND HOLDINGS BHD
| Research House: AMMB | Price Call: BUY | Target Price: 2.75 |
Cocoaland Holdings (Cocoaland) posted a 4Q net profit of RM9mil,bringing earnings for the full year to an impressive RM19mil.
It outperformed our forecast by 17%, but only made up 78% ofconsensus estimates. We deem the results to be ahead of our expectations, withthe positive variance coming from a stronger-than-expected 4QFY11.
Management declared a (single-tier, tax-exempt) second interimdividend of 3 sen/share for the quarter, bringing total dividends to 5.5sen/share. This is 1 sen higher than that declared in the previous year.
Cocoaland reported a stellar set of 4Q results. Notwithstandingsome seasonality in the final quarter, turnover was up 29% QoQ mainly on theback of higher demand for the group's core fruit gummies, higher utilisationrate of its PET beverage lines as well as a bettermargin product mix.
Net profit, which tripled to RM10mil from a mere RM3mil in thepreceding quarter, was also boosted by margin gains from lower costs of rawmaterials, namely sugar. As an indication, raw sugar price for 2HFY11 fell 20%from its peak in June 2011. Consequently, costs of goods sold as a percentageof revenue fell 10ppts QoQ in 4Q.
Cocoaland's FY11 net profit leapt to RM19mil (YoY: 96%) onback of a 26% YoY rise in turnover. The improved performance was largely due torobust sales volume in 4Q, upward revision in ASPs and lower costs of rawmaterials, which more than offset the negative effects of a weak US dollarexchange rate used for the group's exports overseas. All in, we have trimmedour FY12F-13F earnings forecasts by 16%-19%, taking into account our latestutilisation rates and margin assumptions. Earnings growth moving forward iswell underpinned by new production facilities for fruit gummies and hardcandies scheduled to be operational by end-2012, as well as higher utilisationrates of its PET beverage lines from better off-takes by associate Fraser &Neave Holdings (FNH Mk Equity, Hold) and other MNCs.
We maintain our BUYrecommendation on Cocoaland with a slightly higher fair value of RM2.75/share (RM2.45/share previously) as weroll forward our valuation base to FY13F to better capture the group's earningspotential. We continue to peg FY13F earnings to a fair PE of 15x, or at a 15%discount to F&N's implied target PE of 18x.
Source: AmeSecurities
Cocoaland Holdings - Waiting for its sweet spot
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Company Name: COCOALAND HOLDINGS BHD
| Research House: CIMB | Price Call: SELL | Target Price: 1.84 |
Target RM1.84
As Cocoaland's new factory is only expected to be ready at the end of this year instead of mid-12, FY12 earnings growth will mainly be driven by higher prices. Despite the 34% FY11 earnings outperformance, valuations remain expensive for this F&B small cap.
As Cocoaland's new factory is only expected to be ready at the end of this year instead of mid-12, FY12 earnings growth will mainly be driven by higher prices. Despite the 34% FY11 earnings outperformance, valuations remain expensive for this F&B small cap.
November 23, 2011
Weaker ringgit leaves a bad taste for Cocoaland
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Cocoaland Holdings Bhd
(Nov 23, RM2.00)
Maintain underperform at RM2 with revised target price of RM1.76 (from RM1.88): We cut our FY11 forecast as 9MFY11 core net profit was 12% below expectations due to a weaker ringgit. We maintain our 'underperform' call. Though we still value the stock at a 10% discount to our target market price-earnings ratio, we cut our target price as we roll it forward and use 11.3 times CY13 PER (previously 13 times CY12).
Cocoaland's 3QFY11 net profit was down 33.3% quarter-on-quarter, mainly due to a weakening of the ringgit from RM2.93 per US dollar in July 2011 to RM3.20 in early October. This crimped export earnings (50% of total revenue), which are mainly denominated in the greenback. No interim dividend was declared, which was within expectations.
Cocoaland should experience some profit margin recovery from 4QFY11 onwards as it is looking to raising export selling prices to offset the ringgit depreciation. Even then, we think that Cocoaland will have difficulty meeting our FY11 earnings per share forecast, which we now scale back. Our FY12/FY13 forecasts are unchanged.
Its new warehouse and factory are under construction and are likely to be completed by end-1H12. They will boost the company's annual capacity by 50% to 6,700 tonnes for fruit gummies and double its cocopie capacity to 6,000 tonnes. Its PET hot bottle annual capacity will also double to 240 million. However, it might take some time for the company to ramp up utilisation of the new factory. We expect the full impact of the expansion to come through in FY14.
Cocoaland's valuation is still not cheap. Investors should switch to large-cap consumer stocks like QSR Brands Bhd which are at more attractive ratings. ' CIMB Research, Nov 23
This article appeared in The Edge Financial Daily, November 24, 2011.
Company Name: COCOALAND HOLDINGS BHD
| Research House: CIMB | Price Call: SELL | Target Price: 1.76 |
Cocoaland Holdings Bhd
(Nov 23, RM2.00)
Maintain underperform at RM2 with revised target price of RM1.76 (from RM1.88): We cut our FY11 forecast as 9MFY11 core net profit was 12% below expectations due to a weaker ringgit. We maintain our 'underperform' call. Though we still value the stock at a 10% discount to our target market price-earnings ratio, we cut our target price as we roll it forward and use 11.3 times CY13 PER (previously 13 times CY12).
Cocoaland's 3QFY11 net profit was down 33.3% quarter-on-quarter, mainly due to a weakening of the ringgit from RM2.93 per US dollar in July 2011 to RM3.20 in early October. This crimped export earnings (50% of total revenue), which are mainly denominated in the greenback. No interim dividend was declared, which was within expectations.
Cocoaland should experience some profit margin recovery from 4QFY11 onwards as it is looking to raising export selling prices to offset the ringgit depreciation. Even then, we think that Cocoaland will have difficulty meeting our FY11 earnings per share forecast, which we now scale back. Our FY12/FY13 forecasts are unchanged.
Its new warehouse and factory are under construction and are likely to be completed by end-1H12. They will boost the company's annual capacity by 50% to 6,700 tonnes for fruit gummies and double its cocopie capacity to 6,000 tonnes. Its PET hot bottle annual capacity will also double to 240 million. However, it might take some time for the company to ramp up utilisation of the new factory. We expect the full impact of the expansion to come through in FY14.
Cocoaland's valuation is still not cheap. Investors should switch to large-cap consumer stocks like QSR Brands Bhd which are at more attractive ratings. ' CIMB Research, Nov 23
This article appeared in The Edge Financial Daily, November 24, 2011.
August 29, 2011
Cocoaland Holdings Bhd RR 2Q FY11
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Company Name: COCOALAND HOLDINGS BHD
| Research House: WILSON & YORK | Price Call: BUY | Target Price: 2.60 |
August 1, 2011
Margin revival in consumer sector
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Consumer sector
We have turned more constructive on the consumer sector, in particular on selected food and beverage (F&B) companies within our consumer universe. We believe peaking inflation with softening commodity prices are strong drivers for potential earnings upside of consumer stocks from 2H11 onwards.
An absence of intensified worries over high inflation and higher disposable income should provide support to increased consumption levels. While consumption of consumer goods and services are relatively more resilient compared with other industries, easing inflationary pressures could be a further boost to top line growth of consumer companies. Our in-house economist forecasts July inflation rate to inch up further from June's 3.5% year-on-year'' (a 27-month high) due to the upward adjustments in energy tariffs, before retreating.
In addition to the confluence of structural and cyclical issues, we observe that most global commodity prices have fallen off their peaks on weak recovery in the developed world and slower growth in emerging markets. China, the world's largest importer of various commodities, recently posted a slower GDP of 9.5% for 2Q, against 9.7% in the previous quarter. Should most commodity prices see a notable slowdown towards end-2011, and as raised average selling prices (ASPs) are sustained, we see room for margin expansion on the back of lower input costs. With the exception of sugar and milk, other key input costs such as corn, wheat, cocoa and tapioca starch are trending downwards, 5% to 19% off year-to-date (YTD) peaks.
Across our coverage of consumer stocks, large caps with pricing power and market share leadership have largely outperformed the market by +6% at +27% YTD.
Smaller and medium-sized caps on the other hand were down by as much as 21% in the same period, mainly due to margin compression as a result of high raw materials prices. In this current environment, we prefer staples over discretionaries. Smaller and medium-sized F&B manufacturers are likely to see higher earnings upside potential arising from margin expansion.
Our top 'buys' are Three-A Resources Bhd (3A) and Cocoaland Holdings Bhd as gross margins for both stocks have been hard hit in the past few quarters. Margin expansion should therefore be stronger. Raw materials dominate the bulk of operating costs at 40% to 50% on average. We like 3A for its long-term earnings transformational growth as underpinned by product and capacity expansion from its China joint venture with Wilmar International. We also like Cocoaland for its aggressive but well-defined capacity expansion plans in gummies and high-growth PET 'hot-filling' technology within the beverages industry.
Potential beneficiaries of a lower cost structure include F&B giant Fraser & Neave Holdings Bhd (F&N) and KFC Holdings Bhd (KFCH) for their superior pricing power and focus in niche markets. Stabilising malting barley and hops in 2H11 ' key inputs for brewers ' may also partially offset the price surge effects seen in 1H. Depending on the magnitude, this could potentially translate into better than expected margins in 2012 for Carlsberg Brewery and Guinness Anchor Bhd. ' AmResearch, Aug 1
This article appeared in The Edge Financial Daily, August 2, 2011.
Company Name: COCOALAND HOLDINGS BHD
| Research House: AMMB | Price Call: BUY | Target Price: 2.45 |
Consumer sector
We have turned more constructive on the consumer sector, in particular on selected food and beverage (F&B) companies within our consumer universe. We believe peaking inflation with softening commodity prices are strong drivers for potential earnings upside of consumer stocks from 2H11 onwards.
An absence of intensified worries over high inflation and higher disposable income should provide support to increased consumption levels. While consumption of consumer goods and services are relatively more resilient compared with other industries, easing inflationary pressures could be a further boost to top line growth of consumer companies. Our in-house economist forecasts July inflation rate to inch up further from June's 3.5% year-on-year'' (a 27-month high) due to the upward adjustments in energy tariffs, before retreating.
In addition to the confluence of structural and cyclical issues, we observe that most global commodity prices have fallen off their peaks on weak recovery in the developed world and slower growth in emerging markets. China, the world's largest importer of various commodities, recently posted a slower GDP of 9.5% for 2Q, against 9.7% in the previous quarter. Should most commodity prices see a notable slowdown towards end-2011, and as raised average selling prices (ASPs) are sustained, we see room for margin expansion on the back of lower input costs. With the exception of sugar and milk, other key input costs such as corn, wheat, cocoa and tapioca starch are trending downwards, 5% to 19% off year-to-date (YTD) peaks.
Across our coverage of consumer stocks, large caps with pricing power and market share leadership have largely outperformed the market by +6% at +27% YTD.
Smaller and medium-sized caps on the other hand were down by as much as 21% in the same period, mainly due to margin compression as a result of high raw materials prices. In this current environment, we prefer staples over discretionaries. Smaller and medium-sized F&B manufacturers are likely to see higher earnings upside potential arising from margin expansion.
Our top 'buys' are Three-A Resources Bhd (3A) and Cocoaland Holdings Bhd as gross margins for both stocks have been hard hit in the past few quarters. Margin expansion should therefore be stronger. Raw materials dominate the bulk of operating costs at 40% to 50% on average. We like 3A for its long-term earnings transformational growth as underpinned by product and capacity expansion from its China joint venture with Wilmar International. We also like Cocoaland for its aggressive but well-defined capacity expansion plans in gummies and high-growth PET 'hot-filling' technology within the beverages industry.
Potential beneficiaries of a lower cost structure include F&B giant Fraser & Neave Holdings Bhd (F&N) and KFC Holdings Bhd (KFCH) for their superior pricing power and focus in niche markets. Stabilising malting barley and hops in 2H11 ' key inputs for brewers ' may also partially offset the price surge effects seen in 1H. Depending on the magnitude, this could potentially translate into better than expected margins in 2012 for Carlsberg Brewery and Guinness Anchor Bhd. ' AmResearch, Aug 1
This article appeared in The Edge Financial Daily, August 2, 2011.
May 24, 2011
COCOLND - Cocoaland not so sweet as further rise in raw material costs expected
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Research House: CIMB
Cocoaland Holdings Bhd
(May 24, RM 2.09)
Maintain underperform at RM2.10, target price of RM1.88: Despite coming in at only 81% of our forecast when annualised, Cocoaland's 1QFY11 results met market and our expectations as earnings should be stronger in the remaining quarters. No interim dividend was declared, which was within our expectations.
We maintain our earnings per share forecasts and our target price of RM1.88, which is based on 13.1 times price-earnings ratio, a 10% discount to our target market PER of 14.5 times.
The stock remains an underperform given the potential downside triggers of a further rise in raw material and packaging costs; larger than expected losses for its bottling operations and delays in construction of its new factory.
For exposure to the mid-cap food and beverage sector, we prefer CI Holdings Bhd.
Cocoaland's 1QFY11 earnings before interest, tax, depreciation and amortisation (Ebitda) margin was 14.6%, a strong recovery from 4QFY10's 7%.
This was mainly due to the company's ability to pass on the cost of raw materials through a 10% increase in average selling price. The polyethylene terephthalate (PET) hot bottle operations probably recorded a small loss in 1QFY11 but volume should improve later this year when it secures more orders.
However, we do not expect any profit from the operations this year as it will take time to raise its utilisation above the 55% to 60% break even level. The annual capacity is 240 million PET bottles after the capacity expansion in 1QFY11.
However, raw material prices are on the rise. We estimate that sugar accounts for 30% to 40% of total raw material costs, which, in turn, make up 25% of Cocoaland's production costs.
The commercial sugar price has soared 60% year-on-year to RM2.62 per kg. Although Cocoaland is not one of the 13 beverage producers that lost their entitlement to sugar subsidies in January 2011, the company started paying RM2.30 per kg for sugar this month following an increase in the price of subsidised sugar.
The subsidised price is currently only 13% lower than the commercial selling price. We think that it is only a matter of time before the subsidy is scrapped altogether.
At end-2010, Fraser & Neave Holdings acquired 39.6 million new Cocoaland shares or a 23.1% stake at RM1.38 a share. The RM54.6 million cash raised will be used for Cocoaland's capital expenditure this year.
In March, Cocoaland acquired land for its expansion programme. The new factory, which is expected to be completed by year-end, will boost the company's annual production capacity by 50% to 6,700 tonnes for fruit gummies and double its coco-pie capacity to 6,000 tonnes. ' CIMB Equities Research, May 24
This article appeared in The Edge Financial Daily, May 25, 2011.
Company Name: COCOALAND HOLDINGS BHD
Research House: CIMB
Cocoaland Holdings Bhd
(May 24, RM 2.09)
Maintain underperform at RM2.10, target price of RM1.88: Despite coming in at only 81% of our forecast when annualised, Cocoaland's 1QFY11 results met market and our expectations as earnings should be stronger in the remaining quarters. No interim dividend was declared, which was within our expectations.
We maintain our earnings per share forecasts and our target price of RM1.88, which is based on 13.1 times price-earnings ratio, a 10% discount to our target market PER of 14.5 times.
The stock remains an underperform given the potential downside triggers of a further rise in raw material and packaging costs; larger than expected losses for its bottling operations and delays in construction of its new factory.
For exposure to the mid-cap food and beverage sector, we prefer CI Holdings Bhd.
Cocoaland's 1QFY11 earnings before interest, tax, depreciation and amortisation (Ebitda) margin was 14.6%, a strong recovery from 4QFY10's 7%.
This was mainly due to the company's ability to pass on the cost of raw materials through a 10% increase in average selling price. The polyethylene terephthalate (PET) hot bottle operations probably recorded a small loss in 1QFY11 but volume should improve later this year when it secures more orders.
However, we do not expect any profit from the operations this year as it will take time to raise its utilisation above the 55% to 60% break even level. The annual capacity is 240 million PET bottles after the capacity expansion in 1QFY11.
However, raw material prices are on the rise. We estimate that sugar accounts for 30% to 40% of total raw material costs, which, in turn, make up 25% of Cocoaland's production costs.
The commercial sugar price has soared 60% year-on-year to RM2.62 per kg. Although Cocoaland is not one of the 13 beverage producers that lost their entitlement to sugar subsidies in January 2011, the company started paying RM2.30 per kg for sugar this month following an increase in the price of subsidised sugar.
The subsidised price is currently only 13% lower than the commercial selling price. We think that it is only a matter of time before the subsidy is scrapped altogether.
At end-2010, Fraser & Neave Holdings acquired 39.6 million new Cocoaland shares or a 23.1% stake at RM1.38 a share. The RM54.6 million cash raised will be used for Cocoaland's capital expenditure this year.
In March, Cocoaland acquired land for its expansion programme. The new factory, which is expected to be completed by year-end, will boost the company's annual production capacity by 50% to 6,700 tonnes for fruit gummies and double its coco-pie capacity to 6,000 tonnes. ' CIMB Equities Research, May 24
This article appeared in The Edge Financial Daily, May 25, 2011.
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