KUALA LUMPUR: Food producers CAB Cakaran Corporation Bhd (CAB) posted a net profit of RM38.38 million for the first quarter (Q1) ended December 31, 2023 (FY24), a 8.3 per cent decline posted in the same quarter last year.
Net profit declined mainly due to a lower year-on-year (YoY) gain on fair value adjustment of the company’s biological assets, coupled with higher tax expenses.
For Q1, CAB posted 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 company’s net profit for Q1 FY23 to RM41.87 million, the highest on record.
In Q1 FY24, CAB recorded an RM1.59 million gain on fair value adjustment of the company’s biological assets.
Q1 FY24 tax expenses were RM15.71 million, an increase of 41.9 per cent from a year ago.
Q1 revenue dipped 1.6 per cent YoY to RM548.48 million, dragged by a decline in the ASP for chicks and broilers.
On a YoY basis, the average selling price of chicks and broilers fell 12.7 per cent and 5.7 per cent, respectively.
CAB’s financial position continued to improve, with cash position rising 45.2 per cent YoY to RM202.61 million as of December 31, 2023, up from RM139.58 million a year earlier.
Considering its latest results, CAB’s stock trades at a price-to-earnings (P/E) ratio of approximately 5.4x, compared to the peer average of 11.4x.
Group managing director Christopher Chuah Hoon Phong said the company is pleased to start FY24 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.
“We will continue to seek strategic mergers and acquisitions (M&A) opportunities to develop innovative products and create sustainable food solutions.
“With our strong cash position, we have the firepower to catalyze our evolution into a world-class food conglomerate,” he said in a statement.
On the expansion front, Chuah said CAB continue to work towards launching Phase 1 of its venture in Indonesia with the Salim Group, its 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 diversify our revenue and 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 said.
In the recent financial year ended September 30, 2023 (FY23), CAB reported a net profit of RM107.25 million, an increase of 85.8 per cent from a year ago.
Increased demand, higher selling prices, and lower production costs drove the improved performance.
FY23 revenue was RM2.25 billion, a 14.9 per cent YoY increase and the highest in the company’s operating history.
