570_Chocolate-stock-image
Demand for chocolates drives the cocoa industry where JB Foods is one of Malaysia's leading cocoa processors. Internet photo.

Christmas has just passed, and with Valentine’s Day and Chinese New Year festivities around the corner, it is the season when cash registers ring loud for chocolate sellers.

The chocolate market drives the cocoa industry and one player that is busy preparing for this season is JB Foods, one of Malaysia’s largest cocoa ingredients producers, which listed on the Singapore Exchange in July 2012.

In 2010, about 15% of cocoa beans processed in Malaysia came from JB Foods’ factory in Pelabuhan Tanjung Pelepas, a strategic logistic hub within a free trade zone in Johor Bahru.

It supplies to customers all over the world, ranging from large international trading houses like ADM and Olam to F&B and confectionery manufacturers like Nestle and Hershey.

revenue-pie
JB Foods' revenue is well-diversified geographically.

Strategic location in Malaysia

On the global cocoa market, Malaysia is an up-and-coming player, accounting for about 40% of Asia’s cocoa grinding volume.

In recent years, Malaysia has gained prominence as a cocoa processor, even though Europe and North America are the major consuming countries.

Several reasons:

Firstly, cocoa trees grow in tropical areas such as Africa or Asia. JB Foods sources for cocoa beans from Indonesia, which is the world’s third largest cocoa producer.

The geographical proximity is important not only because shipment costs are reduced but also because product quality partly depends on how quickly the perishable cocoa beans reach the processing factory.

Secondly, high labor and operating costs in the traditional grinding nations in Europe and the Americas have resulted in cocoa grinding shifting to Africa and Asia.

Also, Malaysia has created a niche for itself in the halal foods industry, and is recognized as a regional halal hub.

In the long term, China, India and Southeast Asia, which are growing in wealth and have large populations, will be the emerging markets for cocoa products.

JB Foods is building facilities to ramp up its cocoa processing capacity by 42%, from 60,000 tons of cocoa bean equivalent currently to 85,000 tons by FY2013.

Commitment to dividend payment

Stock price

28.5 c

Market cap

S$114 m

9M2012 revenue

S$158 m

9M2012 net profit

S$13 m

Indicative dividend 
yield 

3.5%

Source: Bloomberg

The company was listed on 23 July 2012 and has made a commitment to pay 30% of its net FY2012 profit as dividends.

A one-cent interim dividend was paid on 17 Oct 2012.

It generated net profit of M$32 million (S$13 million) during the first 9 months of 2012 on revenue of M$388.6 million (S$158 million).

JBFoods_9Mfy12

Net profit was down 8.8% as it was affected by lower average prices of its cocoa ingredient products. Other than exposure to price fluctuation of cocoa beans and cocoa products, it also has forex risks.

Cocoa powder and cocoa butter contributed 86.4% to group revenue. Deodorized cocoa butter, cocoa liquor and other products contributed 13.6%.

Recent story: Insider buying @ AVI-TECH, JB FOODS


Comments  

0 #1 Mistake 2013-01-22 18:54
jbfood ipo at 30cents on 28cents
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