CAB 7174 CAB CAKARAN CORPORATION BERHAD — A Rising Star In The Poultry Industry and The Secret Behind The Stock Price Increases and Success Story
Cakaran Corp Bhd (CAB, 7174) is a comprehensive poultry agricultural company based in Penang, Malaysia, primarily engaged in poultry farming and sales. The company was founded in 2002 and listed on the ACE Market in 2003, before being transferred to the Main Market in 2006. CAB’s founder, Mr. Chuah Ah Bee, has over 40 years of experience and expertise in the comprehensive poultry livestock industry, leading the company to become one of Malaysia’s largest integrated poultry farmers and food producers.
The company’s business involves comprehensive poultry operations, supermarket operations, and fast-food operations. Its comprehensive poultry operations include hatcheries, broiler farms, poultry feed trading, and it has livestock farms in Penang, Kedah, Negeri Sembilan, Melaka, and Johor. Its broiler farms are located on the Malaysian peninsula. Downstream operations include slaughterhouses, broiler processing plants, and sales of various processed products, sold under its own brands such as Ayam Likes, Farm’s Best, Likes, Rasaria, and Segaria. The company currently operates six slaughter and processing plants located in Kedah, Kuala Lumpur, Melaka, Johor, Pahang, and Singapore.
The second business of CAB is operating medium-sized supermarkets, such as its subsidiaries Home Mart Fresh & Frozen Sdn Bhd and Pasaraya Jaya Gading Sdn Bhd. Currently, the company has 11 supermarket stores, all located in suburban areas, distributed in Kuantan, Kelantan, Pahang, and Kedah. In addition to Malaysia, CAB has also established a strong distribution network in the Singaporean market, including retail stores, wholesalers, restaurants, hotels, supermarkets, and hypermarkets.
The third business of CAB is operating a chain of fast-food restaurants, namely Kyros Kebab, and the company currently owns five outlets.
According to CAB’s financial data in its 2022 annual report, the company achieved total revenue of approximately RM1,954.28 million, an increase of about 13.70% from the previous year. Its net profit was about RM57.72 million, an increase of about 385.91% year-on-year. This was due to the Ukrainian conflict and sanctions against Russia, which led to a significant drop in major grain supplies, thereby pushing up global food prices, such as poultry and other related food also increased. Therefore, with the increase in most food selling prices, CAB’s profit margin also increased synchronously.
In addition, CAB announced its entry into the drone business in January 2022, signing a joint venture agreement with MATA Aerotech to provide unmanned aerial vehicle spraying services for the oil palm industry on the Malaysian peninsula. This business also brought the company approximately RM0.25 million in revenue in the 2022 fiscal year. This indicates that CAB is actively exploring new areas and businesses to expand its revenue sources and improve its profitability.
In terms of the latest quarterly performance, the financial report for the first quarter ending on December 31, 2022, released by the company, showed that the total revenue reached approximately RM557.31 million, an increase of about 12.77% from the same period last year. This is mainly attributed to the outstanding performance of the company’s business, especially its comprehensive poultry business. Malaysia is the company’s largest market, contributing RM487.30 million or 87.44% of the revenue this quarter, followed by 12.11% from Singapore and 0.45% from other countries. The net profit for Q1FY2023 was about RM41.87 million, a year-on-year increase of about 130.18%. This is due to the increase in broiler chicken prices and the increase in sales of processed chicken and food.
In addition to the above business performance, CAB announced its entry into the high-end chicken products market in January 2022. The company launched Omega 3 chicken through its subsidiary, Farm’s Best Food Industries Sdn Bhd, which contains 75% more Omega 3 than regular chicken, and is expected to boost future financial performance. In addition, the company plans to distribute 2,396,424,700 vouchers to shareholders in a “3-for-1” ratio to show appreciation for their support.
Looking ahead, the production of Malaysian poultry breeders has gradually improved after the epidemic, and foreign laborers arrived in October last year to ease the problem of staff shortages. In addition, the government intends to allow the prices of broiler chickens and eggs to float freely with the market price after June this year to solve the problem of food supply shortages. These policies are expected to increase the profitability of the poultry farming industry, and CAB is expected to benefit from it.
Finally, CAB’s current P/E ratio is 6.60 times, which is relatively low. Considering the company’s market leadership position in poultry farming and related businesses, good financial performance, and future growth potential, do readers think the company has investment value?
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