PETALING JAYA: CAB Cakaran Corporation Bhd, one of Malaysia’s largest food producers, reported a net profit of RM38.38 million for the fiscal quarter ended Dec 31, 2023 (Q1’24), an 8.3% decline from a year ago.
Net profit fell mainly due to a lower year-on-year (y-o-y) gain on fair value adjustment of the group’s biological assets, coupled with higher tax expenses.
For the quarter ended Dec 31, 2022 (Q1’23), CAB recorded an RM11.27 million gain in the fair value of its biological assets. This, coupled with an increase in the average selling price (ASP) of feed, processed chicken and other processed food products, had sent the group's net profit for Q1’23 to RM41.87 million, the highest on record.
In Q1’24, CAB recorded an RM1.59 million gain on fair value adjustment of the group's biological assets. Tax expenses in the quarter amounted to RM15.71 million, an increase of 41.9% from a year ago.
CAB's Q1’24 revenue dipped 1.6% y-o-y to RM548.48 million, dragged down by a decline in ASP for chicks and broilers. On a year-on-year basis, the ASP for chicks and broilers fell 12.7% and 5.7%, respectively.
The group’s financial position continued to improve, with CAB’s cash position rising 45.2% y-o-y to RM202.61 million as of Dec 31, 2023, up from RM139.58 million a year earlier.
Taking into account its latest results, CAB's stock trades at a price-to-earnings ratio of about 5.4 times, compared to the peer average of 11.4 times.
Group managing director Christopher Chuah Hoon Phong said, “We are pleased to kick off FY 2024 with a strong quarterly performance. We will continue to pursue operational efficiency, economies of scale, and long-term sustainable growth opportunities. In the near term, we expect to benefit from the recent shortages of pork and eggs, both staple foods for Malaysians. These shortages should sustain high demand for chicken meat, which supports the outlook for broiler prices.”
He added that they will continue to seek strategic merger and acquisition opportunities to develop innovative products and create sustainable food solutions.
“With our strong cash position, we have the firepower to catalyse our evolution into a world-class food conglomerate,” said Chuah.
On the expansion front, he said they continue to work towards launching Phase 1 of their venture in Indonesia with Salim Group, their partner and shareholder.
“We have proven we can win in Malaysia, and have now set our eyes on replicating this model globally. Our planned foray into Indonesia will not only diversify our revenue but also give us a new engine of growth. With the backing of Salim Group, one of Indonesia's biggest conglomerates, we are confident that we have a long runway for growth in Indonesia,” he added.
In the recent financial year ended Sept 30, 2023 (FY23), CAB reported a record-high net profit of RM107.25 million – an increase of 85.8% from a year ago. The improved performance was driven by increased demand, higher selling prices, and lower production costs. FY23 revenue was RM2.25 billion, a 14.9% y-o-y increase and the highest in the group's operating history.
