Cocoaland Holdings Bhd (+ve)

Cocoaland (Fundamental: 2.8/3, Valuation: 2/3) saw its share price jump 10.1% to close at an all-time  high of RM2.72 yesterday, as ringgit weakened to a 17-year low of 3.91 against the greenback. The  company is a net beneficiary of the stronger USD, with some 60% export sales.

To recap, the stock fell to an intraday low of RM2 on July 20 after First Pacific Co Ltd aborted its plan to  acquire the underlying business of Cocoaland, citing that the latter was no longer a strategic fit.

The selldown presented a good buying opportunity as Cocoaland’s fundamentals remain intact. Since it  was re-featured by InsiderAsia on July 23, the stock has risen by 22.0% in just two weeks.

Valuations remain attractive at trailing 12-month P/E of 15.9 times — relative to our forecast of strong  double-digit earnings growth this year, which will be underpinned by its 160% and 260% capacity  expansion in fruit gummy and hard candy, respectively.

This article first appeared in digitaledge Daily, on August 7, 2015.