Cocoaland Holdings To Consider No More Take Over Offers

Sep 26 16
After being the subject of two failed takeover bids last year, snacks and candy
maker Cocoaland Holdings Bhd (KLSE:COCOLND) said it will not consider anymore
takeover offers, at least for now, and will concentrate instead on expanding its
business. We are not considering anymore offers now as we dont think we can get
a good price under the current prevailing market condition, said its Executive
Director Lau Kee Von.
Cocoaland Holdings Bhd Announces Unaudited Consolidated Earnings Results for
the Second Quarter and Six Months Ended June 30, 2016
Aug 29 16
Cocoaland Holdings Bhd announced unaudited consolidated earnings results for the
second quarter and six months ended June 30, 2016. For the quarter, the company
reported total profit attributable to equity holders of the company of MYR
10,805,000 or 4.72 sen basic earnings per share on revenue of MYR 67,360,000
compared to total profit attributable to equity holders of the company of MYR
7,549,000 or 3.30 sen basic earnings per share on revenue of MYR 61,668,000 for
the corresponding period last year. Profit before taxation was MYR 13,560,000
against MYR 10,421,000 a year ago. For the six months, the company reported total
profit attributable to equity holders of the company of MYR 18,673,000 or 8.16 sen
basic earnings per share on revenue of MYR 129,891,000 compared to total profit
attributable to equity holders of the company of MYR 15,560,000 or 6.80 sen basic
earnings per share on revenue of MYR 129,410,000 for the corresponding period
last year. Profit before taxation was MYR 23,888,000 against MYR 21,030,000 a year
ago. Net cash provided by operating activities was MYR 11,201,000 against MYR
31,233,000 a year ago. Purchase of property, plant and equipment was MYR
1,799,000 against MYR 981,000 a year ago. Net assets per share were MYR 0.94.
Cocoaland Holdings Bhd Reports Unaudited Consolidated Financial Results for the
First Quarter Ended Mar. 31, 2016
May 30 16
Cocoaland Holdings Bhd reported unaudited consolidated financial results for the
first quarter ended Mar. 31, 2016. For the quarter, the company reported profit
before taxation of MYR 10,328,000 and profit attributable to equity holders of the
company of MYR 7,868,000 or 3.44 sen per basic share on revenue of MYR
62,531,000 against profit before taxation of MYR 10,609,000 and profit attributable
to equity holders of the company of MYR 8,011,000 or 3.5 sen per basic share on
revenue of MYR 67,742,000 for the same period of last year. Net cash genera ted
from operating activities was MYR 2,251,000 against MYR 19,996,000 for the same

period of last year. Purchase of property, plant and equipment was MYR 563,000
against MYR 309,000 for the same period of last year. Profit before taxation
decreased by 2.6% particularly due to lower sales revenue with relatively higher
ingredient cost incurred despite of higher other incomes derived from a fire
insurance claimed during the period.

Analysis
YTD 10 FY16 local sales value increased 12%. YTD 1Q FY16 operating margins came in at 16.5% vs
15.7% in YTD 10 2015. We expect operating margins of 14-18% to prevail over the next several
quarters. Cocoaland has been taking steps to raise margins and is making good progress under very
chal-lenging trading conditions. Exports account for about 52.5% of Cocoaland sales currently;
however China demand is visibly slowing, so we have guided our sales forecast a bit lower. The strong
USD, and the shift to own brand products have been beneficial for margins. See page five.
INVESTMENT RISKS
Risks to our recommendation and target price include: i) rising trends in material costs, ii) an increase
in the general level of interest rates, and iii) a sharp slowdown in the general level of economic activity
in Malaysia or in the economies of the company's major 'own brand' export markets -China/HK and
the Middle East. See page five.
RECOMMENDATION
Major Shareholders (%)
Leverage Success Sdn Bhd 38 0
Fraser & Neave Holdings Bhd 27.2

Tan Booi Charn 2.6

FTSE-BURSA INDEX MEMBERSHIP
FBMKLCI 70 R3M I3A R3M HU RAH
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REPORT INDEX
We maintain our BUY recommendation on Cocoaland Holdings Bhd, but reduce our fair value estimate
slightly to MYR 2.60. It is possible that the share price will surprise on the upside; sales growth and
capacity utili-sation may accelerate more quickly than we expect. Cocoaland has very little debt on the
balance sheet as well as plenty of cash.
Cocoaland has a clean balance sheet and a proven record of growing export sales (see page 5). Own
brand exports are growing very strongly; and own brand margins are higher than OEM margins,
implying more upside to profits. China/HK remains in the top spot as the company's largest export
market, followed by Saudi Arabia in importance. Mean-while, management has been very diligent in
developing the local market. Local sales rose about 12% YTD 10 2016 vs 10 YTD 2015.
COMPANY PROFILE
Cocoaland Holdings Bhd is ranked approximately in the middle of the thirty listed companies in the
Malaysian snack food industry. The com-pany is one of the few home grown Malaysian consumer firms
that have successfully penetrated regional markets. Cocoaland Holding's pred-ecessor company,
MFESB, was formed in 1980. This company and others were consolidated and converted to a public
limited company in 2000 under the name Cocoaland Holdings Bhd, prior to listing in 2005.
17/08/2016 16:58

NoSteveNoJohnnyNoBob Though Cocoland has made very good progress developing its export
markets over the years, the slowdown in global trade has made itself felt even in the resilient snacks
market. The demand slowdown in China is directly affecting demand for all sorts of Malaysian exports,
ranging from electronic parts to palm oil. Consequently, export sales at Cocoloand are likely to remain
soft for a few quarters. There are still a few pockets of export growth, but odds are that total export
growth will be subdued. Like any well run company, Cocoaland is not simply sitting on its hands. Local
sales grew 12% YTD 10 2016 vs YTD 1C) 2015 - an impressive achievement, especially when
compared with the results of many other companies which have recently reported. In addition,
Cocoaland has been making steady progress in Singapore, which is now a lop five' export market.
Cocoaland has plans to build an additional factory in Rawang, bringing the total number of factories to
seven. This new factory will come on line in 2018. Also, Cocoaland will invest another MYR 5-10 mn in
packing machines to increase production capacity. Meanwhile, Cocoaland has been making impressive
progress selling its 'own brand' products in China/HK and the Middle East. YTD 10 2016 own brand
sales accounted for about 64% of export sales, up from 54% YTD 1C) 2015. Cocoaland's management
has made commendable progress in growing new markets under very challenging conditions whilst
maintaining very respectable margins.
Looking ahead, we expect sales growth rates to range between 0-3% pa as the outlook for growth in
Asia and elsewhere is softening. Investors should expect more bumps ahead, but any short term
weakness in the share price may be prove a useful buying opportunity. USDMYR rates appear to be
softening again, and thus exports may perk up a bit. Cocoaland has been fairly successful in growing
its overseas sales as shown by the table below. This is quite encouraging for the medium and long
term as the company's export market is potentially many times the size of its domestic market. There
are very few 'home grown' companies in Malaysia that achieved the record of consistent export
success shown below.
17/08/2016 16:59

NoSteveNoJohnnyNoBob CEO was on The Edge a week ago: This is the affected
paragraph:http://www.theedgemarkets.com/my/article/refined-sugar-price-rise-30
"Cocoaland Holdings Bhd executive director Lau Kee Von told The Edge Financial Daily that an increase
in sugar price will have an impact on sugar-related food manufacturers, but it may not be significant
for Cocoaland as the companys pricing is based on international sugar prices.
Lau said major food exporters like Cocoaland have been trading sugar based on international prices
instead of the government-controlled price.
He said companies that buy sugar based on the government-controlled price are mostly for local
consumption, and they normally comprise small and medium enterprises. (SMEs).
Lau also noted that unlike most commodities, which saw their prices trending down, the raw sugar
price has gone up this year. However, he said it is difficult to say whether the move by the government
to raise the price now is justified."