KUALA LUMPUR (Nov 3): Gummy candy manufacturer Cocoaland Holdings Bhd is likely to see flat growth for its revenue for FY17, according to executive director Liew Fook Meng.

At a press briefing after the group's extraordinary general meeting today, Liew said while he remains upbeat on growth from Cocoaland's candy sales, he foresees revenue from the group's beverage segment would be weaker.

"Revenue this year would be similar to that of last year, because the OEM beverage market is getting more competitive, and 90% of our beverage segment sales come from OEM. But our candy segment is growing steadily; as long as the population grows, the business will grow along with it," he said.

"Because those who buy candy are not wage earners, they are mostly kids who get money from their parents to buy our products. Kids won't feel whether an economy is in downturn or not, and our products are priced [in] sen, so it is not so much affected by averse macroeconomic condition," he explained, adding that 49% of the group's total revenue come from candy, while 25% are from beverage and the remaining were other snacks.

Last year (FY16), Cocoaland's revenue grew 4.2% to RM272.64 million, from RM261.65 million in FY15, while net profit rose 32.51% to RM43.69 million, from RM32.97 million over the same period a year ago.

For the first half of this year (1HFY17), the group's net profit fell 12.81% to RM16.28 million, from RM18.67 million a year ago, while revenue declined by 2.11% to RM127.15 million from RM129.89 million.

Other than organic growth, Liew said Cocoaland is eyeing acquisition of other candy company in the Southeast Asia market as well.

"Our budgeted allocation for such acquisition is about US$10 million, from our internal fund; based on our current cash flow, we can afford that," he said.

As at June 30, 2017, Cocoaland's fixed deposits, short-term deposits, cash and bank balances were worth some RM64.56 million.

"We have met up with a number of targeted companies in Malaysia, Indonesia and Vietnam. We cannot share the name of these companies, but so far, nothing is finalised, they have similar business model with us, but we can't agree on the prices, and we have not seen the kind of synergistic effect that we are expecting," Liew said.

On the recent additional tax requirement from Inland Revenue Board of Malaysia (IRB), Liew said Cocoaland was told that part of its capital reinvestment allowance were rejected for OEM-related production.

"We have consulted our tax consultant, and will see IRB next week to explain our point of view. For now, we will record a contingency liability for the additional tax until this matter is resolved," he said.

On Oct 27 this year, Cocoaland was told to pay additional tax of RM4.06 million plus a 45% penalty of RM1.83 million, arising from a rejected reinvestment allowance it claimed for the years of assessment 2010 to 2014.

Cocoaland's wholly-owned subsidiary Cocoaland Industry Sdn Bhd has been served with a letter from the IRB dated Oct 19 this year on the said tax.