Summary of the report
Company overview
Coconut Feng Group is the second largest manufacturer of coconut and related products in Malaysia, with a market share of 18.1%. Its food is sold to customers in more than 40 countries around the world. Its core products are coconut milk powder and low-fat coconut, while producing other foods such as cream and other traditional Southeast Asian food ingredients. The company is Malaysia's largest coconut milk powder maker, with a market share of 45.3 per cent in 2015, according to Ipsos.
FY2014-FY2016, the company maintained steady growth, with total revenue of 65.2 million ringgit, 78.3 million ringgit and 89.9 million ringgit respectively, and CAGR17.4%; net profit of about 7.3 million ringgit, 13.6 million ringgit and 15.2 million ringgit, CAGR43.9%, respectively. FY2014-FY2016, sales of core products are rising steadily, with sales revenue of 56.4 million ringgit, 71.5 million ringgit and 82.6 million ringgit respectively, contributing 86.6%, 91.3% and 91.9% of the total revenue.
Industry status and prospects
As mainstream consumers pay more and more attention to health and nutrition, the consumer demand for diversified and convenient coconut products is increasing. According to the Ipsos report, the market size of the Malaysian coconut and related products production industry increased from 259.9 ringgit in 2011 to 432.7 ringgit in 2015, with a CAGR of 13.6%. Considering the increasing popularity of coconut products in the global market, the industry is expected to continue to grow and is expected to reach 828.3 ringgit in 2020.
Advantages and opportunities
Its brands "Santan" and "Cocos" are the major global brands of coconut milk powder.
In terms of production capacity, the company is Malaysia's leading coconut milk powder manufacturer, equipped with fully automatic production equipment to ensure quality and stable production.
It has an international network of customers and distributors and a mature global layout.
Weakness and risk
The main raw materials rely on third-party suppliers, and there is a concentrated risk of over-reliance on major suppliers.
Performance is highly dependent on the largest and top five customers, which account for 56% of total revenue in 2016.
The company's products rely on third-party distributors for sales and distribution.
Valuation
The prospectus does not give a performance forecast. The IPO is priced at a price-to-earnings ratio of 19.623.1 times for 2016A, which is higher than that of Hong Kong-listed peers (comparable: Fufeng Group 10.1 times, Huabao International 6.8 times, Lao Henghe Brewing 9.7 times). Taken together, we give IPO a dedicated rating of "4".