Quick take: Guan Chong shares continue uptrend, adding 1.61%

  • Stock on the Move
  • Thursday, 26 Dec 2019

KUALA LUMPUR: Shares in GUAN CHONG BHD continued its uptrend in early trade Thursday.

The cocoa grinder, one of the most actively traded on Bursa Malaysia, climbed five sen, or 1.61% to RM3.15, its highest in at least five years.

Guan Chong, the world’s fourth largest cocoa grinder, announced its acquisition of European-based chocolate maker Schokinag Holding GmbH (SHG) for €29.93mil (RM137.84mil) as part of the group’s global expansion strategy.

It said the proposed acquisition will enable it to expand its presence to Europe and position the group to target new growth opportunities in the world’s largest chocolate consuming market.

RHB Research said Guan Chong’s acquisition of Schokinag and soon-to-be commissioned Ivory Coast plant could lift the firm's earnings to the next level.

The acquisition will help Guan Chong tap into the European Union market as well as minimise the risk of underutilisation at the upcoming Ivory Coast cocoa processing plant, it said.

"Guan Chong plans to ramp up production by improving the utilisation rate and prioritising market share.

"The plant is currently running at only 67% utilisation rate, and if the transition goes smoothly, it intends to increase the industrial chocolate production capacity to 120,000 tonnes per annum (from 90,000 tonnes pa)," RHB said.

RHB has a "buy" call on Guan Chong with a target price of RM3.45.

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