Credit Update: JB Cocoa Posts Another Strong Half-Year Results Despite Wild Swings in Bean Price

Highlights:

• Cocoa bean prices have declined significantly to around USD6,151/MT as of October, largely driven by improving weather conditions in West Africa and stronger production forecasts.

• In 1HFY2026, JB Cocoa delivered robust financial results, with revenue and PBT increasing by 57.7% and 216.1%, respectively.

• Net D/E ratio inched up to 1.03x from 0.8x in March 2025, mainly due to higher trade lines for bean procurement. Despite this, credit and liquidity profiles remain solid, with sufficient coverage for its short-term obligations.

• We expect revenue and profitability to normalise as cocoa bean prices ease, with debt levels likely to trend lower due to the expectation of growing bean production.

• JB Cocoa remains well-positioned to redeem existing debt. Its refinancing ability remains strong. Investors may consider any new issuance if yields are attractive and tenures reasonable.

JB Cocoa had recently published its 1HFY2026 results for the 6 months ended September 2025. As mentioned in the previous article, JB Foods announced a change to its financial year-end from 31 December to 31 March. Owing to this, the figures or ratios presented below for the latest financial period (1HFY2026 – six months ended September 2025) are not entirely comparable with those for the six months ended September 2024.

Outlook – Cocoa Industry

As illustrated in Chart 1, grinding capacity (proxy of demand for cocoa products), has declined slightly since 2023. This softening demand was primarily driven by supply shortage that elevated cocoa bean price and ultimately resulted in slightly lower demand.

In 2025, cocoa bean price has been gradually normalising, stood at around USD 6,151/MT in October from its peak in 2024, largely driven by improving weather conditions in key cocoa-producing regions in West Africa, as well as stronger production forecasts.

In addition, Ecuador, a country in South America, is set to become the world’s second-largest cocoa producer as output has been rising rapidly, supported by stronger incentives for farmers. Ecuadorian farmers receive approximately 90% of the global cocoa price, compared with about 60–70%.

Looking ahead, a global surplus is expected for the 2026 crop year, supported by Ecuador’s growing production, improving weather conditions and higher farm-gate prices. These factors are likely to support a more stable supply environment and gradual recovery in demand for cocoa products.

Overall, we remain cautiously optimistic about the cocoa industry outlook. Although cocoa bean price has fallen due to improving conditions and expanding production, however, structural challenges in West Africa, including ageing cocoa trees and persistent crop diseases may continue to weigh on the supply chain. As a result, we expect cocoa bean price to continue its gradual normalisation, but unlikely to fall back to USD 3,000/MT imminently.

Chart 1: World Cocoa Grindings and Cocoa Bean Price (000’MT and USD/MT) 

Solid financial performance in 1HFY2026

In 1HFY2026, JB Cocoa delivered a solid financial performance, with revenue and profit before tax rising by 57.7% and 216.1% respectively.

The strong surge in revenue was mainly driven by higher average selling prices across all products compared with the previous year. In line with the higher cocoa bean price, cost of sales also increased by 32.6% to USD 692 million. Nevertheless, the group recorded a higher profit before tax of USD 89.9 million in the latest financial period, supported primarily by higher selling prices and hedging gains.

In 6 months ended Sep 2024, JB Cocoa posted a loss before tax of USD 62.6 million, largely due to delays in shipments from bean suppliers under low-price contracts, which created a mismatch in the execution of its own cocoa purchase agreements.

Looking ahead, JB Cocoa’s revenue and profitability should normalise in tandem with the easing in cocoa bean price. If cocoa bean price continues to soften, it would likely help to lift demand for cocoa products as consumers tend to be more willing to spend.

Table 1: Profitability indicator (USD million)

Source: Company’s reports, iFAST Compilations. Data as of 30 Sep 2025

Resilient credit standing despite higher gearing

JB Cocoa’s total borrowings increased to USD 307.2 million from USD 197 million in March 2025, despite softer cocoa bean prices. The group’s debt composition was mainly made up of trade bills (65%), Sukuk issuance (25%), term loans (8%) and revolving credit (2%).

In the latest financial period (six months ended September 2025), the net D/E ratio rose to 1.03x from 0.80x in March 2025. This was driven primarily by the significant increase in trade bills. This remains within our expectations, as the group relies on trade bills to finance cocoa bean procurement.

The cash position remains solid and is sufficient to comfortably cover its short-term debt (excluding trade lines) of about USD 10.6 million. The group recorded negative operating cash flow of USD 110.6 million; however, this does not indicate financial constraints. The negative operating cash flow mainly reflects net outflows from changes in working capital, including repayments to payables, settlement of derivatives and are partly offset by collections from sales of inventories and receivables.

JB Cocoa’s gearing is expected to remain elevated, given that cocoa bean prices are unlikely to fall back to around USD 3,000/MT imminently.

Table 2: Credit metrics (USD million, unless otherwise stated)

*Sep 2025 figures are derived using six months EBITDA and may not be comparable with the FY2025 figures.

Source: Company’s reports, iFAST Compilations. Data as of 30 Sep 2025

Key risks

Supply chain issue: Supply chain disruptions due to the adverse weather conditions may have a negative impact on the group’s financials and credit metrics.

Fluctuation in cocoa bean prices and foreign exchange risks: Highly volatile bean prices environment and foreign exchange movements may impact the group’s financials negatively.

Our View

Thanks to its strategic cost pass-through model, JB Cocoa’s financial performance and credit profile have remained solid despite highly volatile cocoa bean prices. With bean prices now starting to decline, mainly driven by expectations of improved weather conditions in West Africa and higher production forecasts, we are of the view that JB Cocoa’s revenue and gearing will normalise gradually.

We believe that JB Cocoa’s liquidity profile remains healthy at this juncture, particularly as lower bean prices are likely to ease pressure on the company’s bottom line. Investors may consider any new issuance if yield is attractive and tenure is reasonable.

Table 3: Recommended Bonds

Source: BSM, iFAST Compilations. Data as of 26 Nov 2025.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.