KUALA LUMPUR: Guan Chong Bhd is expected to post a record breaking financial year 2024 (FY24) backed by an uptrending average selling price (ASP), higher revenue, and favourable hedging positions.
RHB Research expects the company's second quarter (Q2) 2024 earnings to remain robust, sustaining at the RM80 million to RM100 million range.
For the second half of 2024 (2H24), RHB Research said the higher ASP trend for its cocoa powder and cocoa butter should translate to a stronger HoH showing.
"We learnt FY24 capacity is well sold, with about 30 per cent of FY25 capacity covered.
"Plant utilisation should be at an optimal level considering the sustained robust demand of cocoa ingredients, except for some delay in the delivery of beans due to the ongoing port congestion issue.
"A majority of Guan's exports are on free onboard (FOB) terms, and we do not expect the higher freight to significantly put pressure on its ASP amid the supply shortage situation," it said.
Overall, RHB Research remains sanguine on Guan Chong's outlook and earnings potential during this supercycle.
It said this is bolstered by historic high ratios amid sustained cocoa demand coupled with limited grinding and bean-on-offer.
"In our view, its Ivory Coast and UK capacity expansion would be the medium-term catalyst. Stay Buy and with a target price of RM5.10," it added.