BUSINESS

GUAN CHONG'S NET DEBT, GEARING MANAGEABLE; NEW ACQUISITION TO POST GREAT OPPORTUNITY

29/09/2020 02:47 PM

KUALA LUMPUR, Sept 29  -- Guan Chong Bhd’s (GCB) acquisition of freehold property at Philips Avent factory via its UK unit GCB Cocoa UK Ltd for an estimated total of RM44.3 million will increase its net debt and gearing of RM655.9 million as at June 2020 to RM700.2 million and 0.62 times, respectively.

However, it is still “manageable”, according to AmInvestment Bank.

The group intends to convert the property into a melting facility where cocoa butter will be melted into liquid form as a value-added service.

“This is in order to target more UK customers. The target completion of the new melting plant is in 2021, and the rationale behind the acquisition is that it is a part of the group’s global expansion strategy,” it said in a note today.

The bank believes the proposed acquisition provides a great opportunity for Guan Chong to access the UK market.

“We continue to like Guan Chong for its growth potential from expansion plans, its position as the fourth largest cocoa bean grinder, and its stable earnings trajectory supported by an experienced management,” it added.

AmInvestment Bank set a “buy” call on the stock with a fair value of RM4.36.

At lunch break, shares of Guan Chong slipped four sen to RM3.28 with 344,000 shares transacted.

--BERNAMA

 

 


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