Use a non-stick pan to toast sweetened coconut flakes over low heat. Keep stirring to prevent from burning. Then, remove from heat and set aside.
Combine the water and cornstarch in a small bowl. Mix with spoon, fork or whisk until the cornstarch has dissolved. Then, set aside.
Prepare a stockpot or skillet on top of the oven. Pour in the coconut milk, sugar and vanilla extract. Mix well with ladle or whisk. Make sure the sugar is melted. Then, cover and turn the oven on to medium-high heat. Bring the mixture into a boil.
Remove the cover and continue boiling for an additional 2 minutes.
Uncover and add the peanuts. Stir and blend well.
Turn heat to simmer. Pour in the cornstarch mixture. Keep stirring until the mixture thickens.
Remove from heat and transfer into a cake pan and flatten the surface.
Sprinkle the toasted coconut flakes on top, Let it cool down.
Cover and refrigerate at least 4 hours before serving.