Chocolate demand in Asia is booming, and this Malaysian company sits at the epicenter.
Shares of Guan Chong Bhd have soared more than 150 percent 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 Guan Chong chief executive officer Brandon Tay (鄭賀聯), Asia’s biggest processor of cocoa beans has been riding a wave of improved margins and higher sales. Net income doubled to 189.3 million ringgit (US$45.8 million) last year, and this year “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 is boosting demand for cocoa, and exacerbating market tightness because of limited supplies of beans in Asia.
Shares of Guan Chong yesterday jumped almost 4 percent to 3.84 ringgit, headed for the highest close on record.
Going forward, Tay wants to move his processing plants closer to bean-growing regions as he seeks to double grinding capacity over the next decade.
That could mean venturing 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.”
The world’s top producers are Ivory Coast and Ghana, and African countries are “quite encouraging in terms of tax incentives,” he said. “We’ve been studying here and there, but it’s not concrete.”
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