KUALA LUMPUR: Kenanga Research expects Guan Chong Bhd, a cocoa processing company, to record a higher sales volume in its business next year despite depressed cocoa prices which dampened the industry outlook. "We believe the sales of cocoa butter will gradually pick up ahead to help fill the new additional total capacity of 200,000 metric tonnes per annum next year. "On top of that, we believe the sales volume will rise to mitigate the impact of the unfavourable cocoa prices and tap into a growing demand for cocoa-based food and beverage products in the emerging markets when its traditional markets slow down," it said in a note today. Although Guan Chong's nine-month results usually make up 55% to 73% of the full-year results in past years, the research house still prefers a conservative stance on the company due to the sluggish cocoa prices. Kenanga Research has reduced its earnings estimates for financial year (FY) 2012 by 10.3% to RM127.4mil and is maintaining its FY13 estimates at RM144.3mil on the back of a better outlook for next year. In line with this adjustment, Kenanga Research has downgraded its target price on Guan Chong to RM2 from RM2.40 previously. - BERNAMA
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