HDBS; GUAN CHONG BUY!

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Guan Chong; Buy; RM2.60
Price Target: RM2.80; GUAN MK
Updates from FY11 results briefing
At its post-results analyst briefing held yesterday, Guan Chong provided more information on the FY11 financial performance as well as an insight into its business outlook.

For the whole of last year, total production tonnage was 126.6 MT (+57.5% y-o-y) while sales tonnage stood at 108.9 MT (+37.5% y-o-y), led by higher output from its new plant in Batam. This lifted FY11 revenue to RM1,382.8m (+19.2%) with net profit coming in at RM123.0m (+21.6%), which was within our expectations.

This year, Guan Chong expects to grind 170k MT of beans (versus our assumption of 175k MT). We gather that the Group has already secured orders for 140k MT of its existing capacity (80k MT in Pasir Gudang and 60k MT in Batam). It is in the midst of increasing its annual grinding capacity by another 60k MT in Batam (commissioning is targeted around April/May this year), which will also widen the product range to
include cocoa powder and deodorized butter.

When the Batam plant Phase 2 expansion is completed (at a cost of RM90m, in addition to the RM60m investment already spent in Phase 1), Guan Chong would rank as the fifth largest cocoa processor in the world based on total production capacity of 200k MT. Leveraging on its growing size, it has secured three new clients (Transmar Commodity Group Ltd, ADM International Sarl and Euromar Commodities GMBH) last year and is currently in advance negotiations with two MNCs for new sales orders.

The Group has ventured downstream as part of its expansion plan, which will benefit from higher in-house consumption of cocoa ingredients too. It has recently purchased a factory near Port of Tanjung Pelepas in Johor for industrial chocolate production. After investing RM12m in the factory and with a further capex requirement of RM30m, the industrial chocolate plant capacity is expected to rise from 2.4k MT/year
currently to 10.4k MT/year by 1Q13. Nevertheless, profit contributions from this venture (which barely broke even last year) will likely be negligible in the initial years.

Meanwhile, the recent weakening of the USD against the Ringgit – from RM3.17 per USD end-Dec to RM3.01 currently – could lift the Group’s 1Q12 earnings. This is attributable to a lumpy forex translation gain arising from its USD loans (amounting to USD324.4m as at 31 Dec 11, translating to an estimated paper profit of RM52m based on the exchange rate differentials). Assuming the USD remains weak vis-àvis
the Ringgit, the reverse effects would be felt over time as Guan Chong is a net loser of a falling USD since nearly all receivables (exports account for c.95% of sales) and payables (mainly for bean purchases,c.80% of revenue) are denominated in USD.

We maintain our net profit forecasts at RM131.8m (7.2% y-o-y) in FY12 and RM149.6m (13.5% y-o-y) in FY13 (please refer to our Company Focus report dated 2 February 2012 for more details). Reiterate our Buy rating with RM2.80 TP (pegged to 8x FY12F FD EPS of 35 sen). Together with an expected dividend yield of 5.5% – based on our FY12F DPS of 12.4 sen and a final tax-exempt DPS of 2.0 sen declared in 4Q11 –this translates to a total potential return of 13.2%.

1CARE : EYES WIDE OPEN

Eyes Wide Open has written an interesting BLOG POST which lists down all the salient points which trouble the proponents of Tak Nak 1 Care , have a good read.

A talented and proud Malaysian

CLSA feng shui chart 2011 & 2012

Free public forum on the forthcoming 1care Healthcare System

got it from here:

http://medicine.com.my/wp/index.php/2012/01/19/free-public-forum-on-the-forthcoming-1care-healthcare-system/

Organised by the FPMPAM
Venue : Global Business and convention center, PJ, Section 19.
(Map)
Date: 12th Feb 2012
Healthcare forum on 1Care

HAPPY CHINESE NEW YEAR 2012

Needy folk say RM500 aid will come in handy

Needy folk say RM500 aid will come in handy
(go and get YOUR MONEY but make sure you are genuinely qualified and wont get caught for cheating)

KUALA LUMPUR: Many came by bus, others by motorcycle while a few walked to sign up for the RM500 aid given to households earning RM3,000 or less.

At Inland Revenue Board offices and several schools and other designated places, it was all smiles for recipients under BR1M, the Bantuan Rakyat 1Malaysia scheme.

Sivaranam Velayuthan, 61, said the money was very welcome, especially since he is now unemployed. He and his 60-year-old wife only get RM160 monthly welfare aid and depend on their two children to buy them food.

“We pay RM124 a month to rent our flat in Setapak, and after paying for electricity and water, we have nothing left.


Queue for aid: People lining up to register for their RM500 aid at the BR1M registration counter at the IRB office at the government complex along Jalan Duta.
“This RM500 will be very helpful. I feel relieved,” he said at the IRB office at the government complex in Jalan Duta.

Housewife Siti Rohani Mohamed, 37, said the money would help her take care of her elderly parents.

“They do not have any income. My siblings and I support them, and it is always nice to have some help,” she said.

Ken Tin Weng, a 43-year-old supervisor, said the aid would make it a happier Chinese New Year for him and his family.

“The money will help buy things to celebrate Chinese New Year next month,” he said.

Police officer Edut Bansa, 32, said the scheme would help her mother back home in Kapit, Sarawak.

“She's in her 60s and she raised us as a single mother. It's good that I can help her,” she said.

At SMK Aminuddin Baki near the city, single mother Tan Kim Neo said the money would help pay off her utility bills.

The 54-year-old NGO administrator said it would be better if the Government gave such aid monthly, but was happy nonetheless.

Former rubbish collector Yaakub Budin, 82, said the money would ease some of his financial burden, especially since he is living alone.

He said the cost of living had risen and, having lost his wife to cancer 15 years ago, the sprightly old man said he had no one to look after him.

“I live alone, so I also have to take care of my health,” he said.

Retired labourer P. Ramaya, 59, said the money would help supplement his RM400 pension, but added that it was not enough, especially since three of his five children were still studying.

His wife, S. Supperamah, 56, added that with her thyroid condition, money was tight for the family.

“I only earn RM1,000 as a road sweeper and we have to pay for our children's college fees, our household expenses and my medical bills,” she said.

Counters had been opened since yesterday to register Malaysians who qualify for the aid at all IRB offices. The registration will continue till Jan 10.