Guan Chong Bhd (GCB) engaged in the manufacturing and trading of cocoa-derived food ingredients and cocoa related products. To-date, GCB’s total capacity stands at 337,000 megatonne per annum, ranking the group as the fourth largest cocoa grinder in the world, said Malacca Securities in the recent Technical Focus Report.
Moving forward, the new cocoa processing plant at Cote D’Ivoire with grinding capacity of 60 kilo metric tonne per annum is expected to boost topline growth in the financial year 2023.
Malacca Securities note that demand will be continues to be anchored by re-opening of international borders which may boost consumption of food & beverages, including chocolates.
Meanwhile, real private consumption expanded 11.0% year-on-year in 2022, suggesting that consumer spending remained robust despite the relatively high inflation environment.
“We also opined that the growing population as well as increasing in disposable income is projected to increase consumption of chocolate products overtime,” said Malacca Securities.
GCB has locked in 65% of their forward sales of cocoa ingredients for financial year 2023 future with an improving combined ratio, suggesting that margins may record improvement.
Technically, share price was on the rebound move since late 2022. Price has since pulled back in recent months, largely supported along daily simple moving average 200 (SMA-200). Many traders use the SMA-200 to predict the market trend. If the price has reached or exceeded the SMA-200 line, then the market will react to that change.
Coming closer, price has staged a mild pullback towards daily exponential moving average 60 before forming a bullish candle. An exponential moving average is a type of moving average that places a greater weight and significance on the most recent data points.
With the breakout-pullback-continuation pattern in place, price may trend higher to target the next resistances at RM2.76-2.85 with long term target at RM3. Support is pegged at RM2.35 and cut loss is located at RM2.51.
