Kuala Lumpur: Chocolate demand in Asia is booming, and this Malaysian company sits at the epicentre.
The shares of Guan Chong Bhd. have soared more than 170 per cent in the past year in Kuala Lumpur as profits doubled, making the producer of chocolate ingredients the best performer on the Bursa Malaysia Consumer Product Index.
For Chief Executive Officer Brandon Tay Hoe Lian, Asia’s biggest cocoa bean processor has been riding a wave of improved margins and higher sales. Net income doubled to 189.3 million ringgit ($45.8 million) last year, and 2019 “is looking as good as last year”, he said in an interview last week.
“We’ve been experiencing strong demand since last year,” Tay said, which has helped the company increase the amount of forward sales. People are munching more dark chocolate, seen as an healthier alternative to ordinary snacks, and that’s boosting demand for cocoa, and exacerbating market tightness because of limited supplies of beans in Asia.
Going forward, Tay wants to move his processing plants closer to the bean-growing regions as he seeks to double grinding capacity over the next decade. That could mean venturing thousands of miles away to Africa or South America as bean production declines in Malaysia and Indonesia, he said.
“I can have additional expansion either in the bean-supply area or the customer area,” Tay said. “For us, the tendency is to go where the beans are. It’s a bit adventurous and some are reluctant to go, but then you’ll miss the chance,” he said. The world’s top producers are Ivory Coast and Ghana, and Tay said African countries are “quite encouraging in terms of tax incentives.”
Cocoa bean processing in Asia jumped 10 percent in the first quarter from a year earlier, according to data last week from the Cocoa Association of Asia. “Demand in the region remains robust for cocoa ingredients,” it said.