CAB (7174) : Stocks With Likelihood Of Corporate Exercise: CAB Cakaran Corporation
CAB Cakaran Corporation Bhd
Poultry companies have long been viewed as unexciting with volatile earnings. The past few years have seen fluctuating poultry prices, rising feedmill costs and influenza outbreaks that have depressed earnings, and forced many smaller players to consolidate.
Investors have recently taken a re-look at the sector, as they seek out smaller stocks while poultry companies have also seen improving earnings. CAB Cakaran Corporation Bhd is one such poultry company that has seen a surge in investor interest, riding on a recovery in earnings and speculation of merger & acquisition (M&A) activities.
CAB recorded a 13.9% y-o-y rise in revenue for FY Sept 2013 to RM609.0 million. Net profit jumped to RM11.9 million from losses in the previous year, although it included a fair value adjustment gain on investment properties worth RM7.1 million.CAB has net gearing of 65% and gross cash of RM16.6 million as at 30 June 2014, with a market capitalization of RM122 million.
At RM1.07, the stock trades at a price-to-book value of 0.96 times and 12-month trailing P/E of 9.39 times. CAB’s valuations are considerably lower than its peers. Lay Hong Bhd is trading at a price-to-book ratio of 1.36 times and a 12-month P/E of 12.5 times while CCK Consolidated Bhd is trading at book value with a 12-month trailing P/E of 10.2 times.
The poultry industry has seen a number of M&A activities in recent times. On its own, CAB has recently proposed to acquire a 51% stake in a Singapore poultry company for S$ 7.5 million. There have been reports that the US-based Cargill group is interested in acquiring a stake in CAB, although pricing is an issue.
http://www.theedgemarkets.com
CAB Cakaran Corporation Bhd
Poultry companies have long been viewed as unexciting with volatile earnings. The past few years have seen fluctuating poultry prices, rising feedmill costs and influenza outbreaks that have depressed earnings, and forced many smaller players to consolidate.
Investors have recently taken a re-look at the sector, as they seek out smaller stocks while poultry companies have also seen improving earnings. CAB Cakaran Corporation Bhd is one such poultry company that has seen a surge in investor interest, riding on a recovery in earnings and speculation of merger & acquisition (M&A) activities.
CAB recorded a 13.9% y-o-y rise in revenue for FY Sept 2013 to RM609.0 million. Net profit jumped to RM11.9 million from losses in the previous year, although it included a fair value adjustment gain on investment properties worth RM7.1 million.CAB has net gearing of 65% and gross cash of RM16.6 million as at 30 June 2014, with a market capitalization of RM122 million.
At RM1.07, the stock trades at a price-to-book value of 0.96 times and 12-month trailing P/E of 9.39 times. CAB’s valuations are considerably lower than its peers. Lay Hong Bhd is trading at a price-to-book ratio of 1.36 times and a 12-month P/E of 12.5 times while CCK Consolidated Bhd is trading at book value with a 12-month trailing P/E of 10.2 times.
The poultry industry has seen a number of M&A activities in recent times. On its own, CAB has recently proposed to acquire a 51% stake in a Singapore poultry company for S$ 7.5 million. There have been reports that the US-based Cargill group is interested in acquiring a stake in CAB, although pricing is an issue.
http://www.theedgemarkets.com
