SINGAPORE (Oct 15): JB Foods is a cocoa-processing company, which listed in July 2012, with operations in Malaysia and Indonesia.
Its processing capacity of 145,000mt per annum ranks it as one of the top 10 players worldwide, behind Barry Callebaut, Cargill and Olam International. The group supplies cocoa ingredients to both trading houses and confectionery producers, and counts international brands like Mars, Nestle and Hershey among its long-standing customers.
In an unrated report by CGS-CIMB, analyst Ngoh Yi Sin says, “The rising consumption of chocolate by emerging economies and improved consumer awareness is driving the global demand for cocoa, in our view.”
Meanwhile, according to Bloomberg, cocoa bean prices have remained low at US$2,024/mt in 3Q18. This is due to bumper crops from Ivory Coast and Ghana, and the combined cocoa ratio (indicator of processing profitability) that stayed favourable at 3.6 in July 2018.
The group’s management has said that the continuing industry consolidation and the high entry barrier of heavy capital requirements might be possible tailwinds for the company.
The group turned around in FY15, and has since delivered positive net profit growth y-o-y, riding on increasing customer demand and subsiding overcapacity for cocoa processing globally. Although JB Foods’ profit margins may be influenced by a myriad of external factors, such as weather and government intervention, the management aims to achieve double-digit sales volume growth very year and sees opportunities to make market share gains.
In addition, the group has expanded its business by opening offices in Switzerland and China, penetrating deeper into those markets.
As at 11.20am, shares in JB Foods are 63 cents.
