Guan Chong shares soar over 150%

  • Business
  • Tuesday, 23 Apr 2019

KUALA LUMPUR: Chocolate demand in Asia is booming, and this Malaysian company sits at the epicentre.

The shares of Guan Chong Bhd have soared more than 150% in the past year in Kuala Lumpur as profits doubled, making the producer of chocolate ingredients a top performer on the Bursa Malaysia Consumer Product Index. The MSCI All Country World Index of stocks is broadly flat in the past year.

For chief executive officer Brandon Tay Hoe Lian, Asia’s biggest cocoa bean processor has been riding a wave of improved margins and higher sales.

Net income doubled to RM189.3mil last year, and 2019 “is looking as good as last year” because of increased capacity and sustained margins, he said in an interview last week.

“We’ve been experiencing strong demand since last year,” Tay said, which has helped the company increase the amount of forward sales. People are munching more dark chocolate, seen as an healthier alternative to ordinary snacks, and that’s boosting demand for cocoa, and exacerbating market tightness because of limited supplies of beans in Asia.

Shares of Guan Chong jumped almost 4% yesterday to RM3.84t, and headed for the highest close on record.

Going forward, Tay wants to move his processing plants closer to the bean-growing regions as he seeks to double grinding capacity over the next decade. That could mean venturing thousands of miles away to Africa or South America as bean production declines in Malaysia and Indonesia, he said.

“I can have additional expansion either in the bean-supply area or the customer area,” Tay said.

“For us, the tendency is to go where the beans are. It’s a bit adventurous and some are reluctant to go, but then you’ll miss the chance,” he said. — Bloomberg

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