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Singapore Investment

Positive signs point to  CAB 7174 CAB CAKARAN CORPORATION BERHAD moving upwards with attractive valuations


CAB Cakaran Corporation Bhd share price is likely to resume its uptrend after closing near its 52-week high of 77 sen recently.

The counter closed 2% higher to 74 sen on May 12 but on a one year basis, it had jumped 48%.

In the past year, CAB fell to a year low of 46 sen and has been hovering around the 50 sen level until it started to climb from March onwards.

Technical analysts expect to see a near-term resistance level of 80 sen followed by 90 sen.

As the local poultry industry picks up pace, the integrated poultry player will likely show much better growth in the near term.

For the first quarter ended 31 December 2022, CAB saws its a 12.8% jump in revenue to RM557.3 million from RM494.2 million a year ago.

In terms of the net profit for Q1FY2023, CAB posted an impressive 130.2% yoy surge to RM41.9 million mainly due to the increase in broiler chicken prices and the increase in sales of processed chicken and food.

The higher revenue was mainly due to higher sales achieved by most of the divisions especially the integrated poultry division.

The integrated poultry division recorded a 14.4% increase in revenue boosted by higher average selling price of feed, processed chicken and processed food products.

However, its supermarket division recorded a lower revenue of RM35.1 million due to the lower sales generated by most of it outlets.

As a result of the lower sales, this division recorded a lower profit from operation of RM690,000.

CAB operates medium-sized supermarkets, such as 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.

Besides Malaysia, CAB has also established a strong distribution network in the Singaporean market, including retail stores, wholesalers, restaurants, hotels, supermarkets, and hypermarkets.

Meanwhile, its fast-food division achieved a higher revenue of RM570,000 but saw lower yoy profit from operation of RM30,000 mainly due to higher cost of goods.

CAB currently owns five Kyros Kebab chain of fast-food restaurants.

In addition, CAB’s entry into the high-end chicken products market in January 2022 is expected to provide elevate its sales and margins further.

The high end chicken products include Omega 3 chicken through its subsidiary, Farm’s Best Food Industries Sdn Bhd, which contains 75% more Omega 3 than regular chicken.

CAB is seen to benefit as the economy started to improve after the easing of the labour shortage problems after the pandemic.

Another catalyst for CAB is the government’s intention to allow the prices of broiler chickens and eggs to float freely with the market price to solve the problem of food supply shortages.

These policies are expected to increase the profitability of the poultry farming industry such as CAB.

Signs are looking positive for CAB and investors will be keen to put their funds in CAB especially given its relatively low P/E ratio is 6.6 times.

CAB seems like a good proxy to the recovery in the economy. After all, demand for chicken meat will keep growing as it is the cheapest source of meat protein.

In fact per capital consumption of chicken meat in Malaysia is around 50 kg, one of the highest in the world.

With a strong demand, the price of broiler is expected to remain high in the next quarter as the supply situation is still unstable.

All these serve as a great opportunity to lay your bet on this poultry country.

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