KUALA LUMPUR (Aug 27): Shares of cocoa manufacturer Guan Chong Berhad (KL:GCB) fell as much as 16.12% or 54 sen from Monday’s close of RM3.35 on Tuesday, following weaker-than-expected financial results for its second quarter ended June 30 (2QFY2024).

At 5pm, the counter closed at RM2.88, still 14.03% or 47 sen lower, for a market capitalisation of RM3.38 billion. It was the third biggest loser on Bursa Malaysia on Tuesday, despite touching a high of RM3.50 earlier.

The group’s financial results on Monday saw margins narrow quarter-on-quarter, although revenue rose to a high of RM2.22 billion in 2QFY2024 from RM1.87 billion in 1QFY2024.

AmBank Research in a note slashed the group’s target price to RM3.57 with a “hold” call, from a “buy” with a target price of RM5.30 previously.

“1HFY2024 earnings of RM159 million were below expectations at 37% of our full-year forecast and 45% of consensus, attributable to lower-than-expected margins.

“Hence, we cut FY2024-2FY2026 earnings by 27.7%/22.9%/14.2%,” it said.

“Despite the group reporting strong 1HFY2024 earnings, we turn cautious on Guan Chong due to ballooning negative operating cash flows amounting to RM1.1 billion for 1HFY24 mainly due to rising inventories and trade debtors amid port congestions currently,” AmBank Research added.

Shares of Guan Chong rallied in the March-July period due to elevated cocoa prices, and are still up 57% this year despite the sell-off.

Separately, RHB Research maintained its target price of RM5.10 pending review, ahead of an analyst briefing following the group’s results.

Guan Chong’s sharp decline prompted Bursa Malaysia to suspend the counter’s intraday short-selling (IDSS).

Machine manufacturer Notion VTec Berhad (KL:NOTION) also saw its IDSS suspended.

One of Bursa’s top active stocks on Tuesday, Notion’s VTec’s shares fell 18.98% or 20.5 sen, before settling at a three-month low of 89 sen — still down 19 sen or 17.59% — for a market capitalisation of RM467.05 million.

Shares of the group have lost 58.2% in value just this month.

Notion VTec manufactures parts for a wide range of products, from hard disks to healthcare products, and the automotive sector.

The company filed its latest quarterly results early August (3QFY2024), where net profit rose to its highest in more than five years to RM20.2 million, up 43.6% on-quarter, with record high quarterly revenue of RM135.5 million.

IDSS activities for these securities are expected to resume Wednesday at 8:30am, when the suspension will be lifted.