Cocoaland-Another Potential Buy?

Before considering putting your money on this potential stock, it would be good if you briefly know up close what this creature is all about.

Cocoaland Holdings Berhad (Cocoaland)is an investment holding company. It engages in manufacturing and trading processed and preserved foods, fruits, and other related food stuffs primarily in Malaysia. Cocoaland also engages in the wholesale and retail of processed and preserved foods; and the manufacture of fruit juices. Its products include chocolates, cookies and wafer, nuts, candies and gummies, snacks, and soft drinks and jellies. Based in Kuala Lumpur, it is a subsidiary of Leverage Success Sdn Bhd.

Next, let us eyeball its prospects.

Cocoaland had set-up a plant in Fujian province in China under a 50:50 joint venture (JV) to produce its popular Lot 100 fruit gummy products. It is one of the few gummy manufacturers in Asia. In the JV, Cocoaland signed an agreement with China’s La Bi Xiao Xin International Co Ltd. The JV company, Coco (Fujian) Food Industrial Co Ltd, involved US$5 million (RM17 million) in investment and commence production in August 2007. Cocoaland manufactures while its Chinese partner manages the distribution and marketing. The investment is fully funded via cash. Expected earnings from the China operations started coming on stream in 2008 The full revenue impact will be seen in 2009.

La Bi Xiao Xin is a unit of Singapore-listed China Lifestyle Food & Beverages Group Ltd. It has more than 17,000 retail outlets under the La Bi Xiao Xin brand and annual revenue of over 500 million renminbi (RM221 million). The distribution network is large. It would be no surprise if Cocoaland may dominate at least 1% of China’s Market someday through this JV company.

Cocoaland is at RM 1.03,has P/E of around 10 compare to the industry standard, Dividend Yield 5%.

Cocoaland can be expected to declare bonus issues and or special dividend for its investors.

Before investing, please read the latest Annual Report. Then make up your own decision.

Caveat emptor!