MARC Ratings has affirmed its rating of AA-IS on Guan Chong Berhad's (GCB) Sukuk Wakalah Programme of up to RM800.0 million with a stable outlook. The outstanding under the programme currently stands at RM600.0 million. 

GCB's established market position in the midstream cocoa supply chain  as the largest cocoa grinder in Asia and fourth in the world  and its strong operational track record remain key rating drivers. The key factors moderating the rating are the volatility of cocoa prices which could diminish margins, and the group's moderate-to-high leverage position.

Its overall grinding capacity has grown by 22% to 337,000MT p.a. following the commencement of its new 60,000MT p.a. grinding facility in C?te d'Ivoire in late 2022. MARC Ratings views the enlarged capacity from C?te d'Ivoire, the world's largest cocoa bean producing country accounting for 44% of annual global bean production, as reinforcing GCB's competitive position by enhancing sourcing reliability and shortening the bean-to-ingredients cycle. C?te d'Ivoire's proximity to the European market, the largest chocolate-consuming region, would also reduce logistics costs and provide benefit from import duty exemption granted to the country by the European Union.

For 1Q2023, the C?te d'Ivoire facility achieved an 80% utilisation rate, reflecting minimal operational hitches since commencing operations; overall, the group utilisation rate was 85.4%. Grinding volume grew 12.3% y-o-y, underlining steady demand for GCB's products, namely cocoa butter (largest revenue contributor), cocoa cake/powder, cocoa liquor (mass) and industrial chocolate. The rating agency understands that about 40% of the output from the C?te d'Ivoire facility will be routed to GCB's Germany-based wholly-owned subsidiary, Schokinag-Schokolade-Industrie GmbH, which specialises in industrial chocolate production. Demand for the higher premium industrial chocolate has also remained strong, with volume growing by 9.4% y-o-y in 20