JB Foods +3.0%; Valuations Attractive -Maybank-KE

24 Jul 2012

JB Foods (Q0W.SG) climbs 3.0% to S$0.34, extending its 10% rise on Monday's trading debut.  JB Foods controls 13.3% of Malaysia's cocoa market, an industry with high entry barriers.  Maybank-Kim Eng says, noting Malaysia has 7.8% of global and 39% of Asia's cocoa-grinding volume, with global cocoa consumption expected to grow 4.7% annually over the next two years.  "With current production capacity of 60,000 tons and utilization rates at 98.4%, the group is poised to increase its market share once its new facilities are completed in FY13."  It notes JB Foods' customer base is wide and it has long-term relationships with customers and suppliers to diversify risks. Its valuation is attractive,  with IPO price at 5.9X FY11 P/E vs Singapore-listed peers' 15.3X,  closest rival Guan Chong's (5102.KU) 7.9X, S ingapore-listed peer Petra's (P34.SG) 18.3X  and global peers' average 21.1X, it says; at the current price, it is at 6.7X FY11 P/E.  Maybank-KE estimates dividend yield at 5.2% . Orderbook quotes indicate resistance at S$0.345 intraday high.