PETALING JAYA: Guan Chong Bhd
is anticipated to record stronger fourth-quarter earnings, supported by a recovery in sales volume and easing working capital pressures as cocoa bean prices normalise.
The recently announced tariff exemptions and normalising New York terminal prices, now back in contango, are expected to bolster demand in the near term, RHB Research said.
While grinding volumes remained pressured in the second half of 2025 as chocolate makers delayed purchases and reformulated amid high bean prices, the research house expects conditions to improve going into 2026 amid a more stabilised market.
Although cocoa butter ratios stay soft, overall margins remain sturdy, supported by forward sales, discounted bean differentials and easing interest costs, the research house added.
RHB Research cut its earnings forecasts for financial year 2025 (FY25) to FY27 by 19%, 20% and 7%, respectively, to reflect lower utilisation rates, a weaker combined ratio and higher finance and tax costs.
The research house lowered its target price to RM1.50 from RM1.80 a share, pegging it to an unchanged 13 times FY26 price-to-earnings ratio (PE).
RHB Research said Guan Chong is still trading at an attractive eight to nine times PE on normalised earnings, highlighting that the world’s fourth-largest cocoa grinder is strengthening its model via long-term contracts, regional expansion and vertical integration.
Key downside risks include sharp raw material price fluctuations, weakening demand and unfavourable foreign-exchange movements.
Guan Chong’s nine-month 2025 core earnings of RM184mil missed estimates due to weaker production tonnage, sizeable realised hedging losses and higher tax expenses.
