COCOLND ... Apr11

WILSON & YORK

INITIATION REPORT
Cocoaland Holdings Bhd is ranked by sales approximately in the middle of the thirty listed companies in the Malaysian snack food industry. Export sales comprise more than 25% of total sales. Cocoaland Holding’s
predecessor company, MFESB, was formed in 1980. This company and others were consolidated and converted to a public limited company in 2000 under the name Cocoaland Holdings Bhd, prior to listing in 2005.

INVESTMENT RISKS
Risks to our recommendation and target price include: i) rising trends in material costs, ii) an increase in the general level of interest rates, and iii) a sharp slowdown in the general level of economic activity in Malaysia or
in the economies of the company’s many trading partners, which number above forty.

RECOMMENDATION
We maintain our BUY recommendation on Cocoaland Holdings Bhd with a fair value estimate of MYR 2.60. It is possible that the share price will surprise on the upside; sales growth may accelerate more quickly and
material costs reduce further and faster than we expect. Equally, investors may need to prepare themselves for one more round of raw material related cost increases before these costs revert to their long run levels.

Compared to its peers in sales and market cap, Cocoaland is somewhat richly valued. To compensate investors for this rich valuation, Cocoaland has two things going for it: an extremely clean and strong balance sheet and a powerful strategic partner, Fraser & Neave. F&N owns a 23.1% stake in Cocoaland and is surely interested in helping Cocoaland reach new customers in Malaysia and abroad.