Shares in YSP Southeast Asia Holding Bhd Fall After Analyst Downgrade

Analysts Lower Guan Chong price target

Shares in Malaysian-listed Guan Chong Berhad (GCB) have fallen after analysts downgraded the company.

YSP Southeast Asia Holding Bhd (YSPSAH) Stock Price Drops

Analyst at AmInvestment Bank have lowered their target price for Guan Chong Bhd (GCB) to RM2.13 after the company announced a 16.7% decline in its first-quarter net profit.

Key Points:

• YSPSAH shares fell as much as 45 sen or 16% to RM2.52 on Thursday, April 6, 2023.
• The decline came after analysts at AmInvestment Bank downgraded the stock to "sell" from "hold" and lowered their target price from RM3.10 to RM2.13.
• The analysts cited concerns over Guan Chong's exposure to China, which is facing a property market downturn and a resurgence of COVID-19 cases.

The downgrade comes after Guan Chong announced a 16.7% decline in its first-quarter net profit to RM20.7 million. The company attributed the decline to lower sales volume and higher input costs, weighing on the margins.

The Malaysian cocoa grinder has been on a downward trend since peaking at RM370 in August 2020. In recent years, the company has faced challenges due to the COVID-19 pandemic, which disrupted supply chains and impacted demand for its products.

However, analysts remain optimistic about Guan Chong's medium and long-term prospects, supported by its strong market position and growing demand for chocolate and cocoa products.

Guan Chong is one of the largest cocoa grinders in the world, with a market share of around 10%. The company supplies cocoa products to major food and beverage companies around the globe.

Despite the recent challenges, analysts believe that Guan Chong is well-positioned to benefit from the growing demand for chocolate and cocoa products in the Asia-Pacific region.