JB Foods IPO - Chocolate World!

I got the email from my stockbroker on JB Foods Analysis and would like to share with you all:

Oh ya.. and its website - http://www.jbcocoa.com/ [don't laugh why i put this link here... You cannot even find it when you search for "jb foods"!!!]

Short Intro
JB Foods, a major cocoa ingredient producer in Malaysia, has launched an initial public offering (IPO) of 100 million shares comprising 84 million new shares and 16 million vendor shares at 30 cents each on the Singapore Exchange (SGX) mainboard.
The placement size is 97 million shares and the public-offer tranche is three million shares. The invitation shares represent 25 per cent of the company's post-IPO enlarged share capital of 400 million shares. Based on the company's share capital and invitation price, its market capitalisation will be $120 million.
It now produces and sells cocoa butter, cocoa powder, cocoa liquor and cocoa cake with cocoa powder and cocoa butter accounting for more than 90 per cent of its revenue.
It has a production capacity of 60,000 tonnes of cocoa bean equivalent per year and in FY2010 a market share of 13.3 per cent in Malaysia based on revenue.
Last year, JB Foods reported revenue of RM691 million (S$276 million) and net profit of RM51 million. Besides expanding its factory in Malaysia, the company is also exploring options to acquire two cocoa processing factories in Germany and Indonesia. 

JB Foods intends to recommend and distribute not less than 30 per cent of its net profit attributable to shareholders this financial year.

Key Points to Note
  • Based on Post-IPO 400m shares, JB Foods' EPS is at 0.1275 RM, converted to around S$ 0.0507. And P/E Ratio = $0.30 / $0.051 = 6.
  • Malaysia’s cocoa grinding industry had shown healthy growth with a CAGR of 4.7% for grinding volume from 2004 to 2010.
  • Steady Increasing Revenue + Profit after Tax throughout 3 years.

My Take
JB Foods may be neglected to the over-casting of shadow by IHH and people will have their money stuck there. Considering the positive market outlook for IPOs and a low P/E ratio, i believe JB Foods may be a hidden gem.
Nevertheless, i also don't recommend holding it for the long term as it is in an industry with such slow CAGR of only 4.7%. There are much better choices out there. :)

Sorry for the late post and the IPO is finished. You can still buy when it comes right up on the trading day at 9am! :D

Hope you like my post and can do me a favour by "Like"-ing my facebook page at www.facebook.com/kissinvesting. Thanks & HUAT AH!


  1. This will be the last mainboard IPO that you can get at 30 cents. In future, they will have to be priced at least 50 cents.

    Priced at PE of 6x, this should present good upside.

    Though food processing business is not high growth, they're not high risk either, the fair price should be trading at around 12-15x PE

    I think there will be non-related parties who have vested interest in seeing this IPO perform - Guan Chong, another cocoa-processor is seeking secondary listing or negotiating with a potential buyer to sell a 20% stake, someone may just try to push up JB Foods, in order to help Guan Chong to fetch a better selling price to the potential buyer,or if not, try to fix its secondary listing IPO price at higher price.

    I have already 'like' your facebook page!

    Wish you a nice weekend.

  2. Hi Eng Hou,

    Thanks for the more elaborate information there :D

    And thanks for liking my fb page too!

    Appreciate if more people can follow suit :D