CAB Cakaran’s subsidiary buys farms and land for RM58.5mil

FRESH . . . The new hatched chicks at CAB Cakaran Sdn Bhd hatchery incubator in Seberang Jaya Industrial Park, Penang yesterday.

KUALA LUMPUR: Farm’s Best Food Industries Sdn Bhd (FBFI), a 53.04%-owned subsidiary of CAB Cakaran Corp Bhd, has entered into conditional sale and purchase agreements (SPAs) to acquire nine properties belonging to Farm’s Best Bhd for some RM58.53mil in cash.

These properties consist of 43 parcels of land with 26 broiler poultry farms. 

In a Bursa Malaysia filing on Tuesday, the poultry breeder said the proposed acquisition would be funded by a mixture of internally generated funds and bank borrowings.

“The proposed acquisition of broiler farms has been identified as one of the key steps to grow our broiler farm assets, as well as to increase the broiler production capacity and enhance market presence.

“CAB Cakaran can also achieve cost efficiency in its poultry supply chain in terms of logistics cost and pooling of resources such as labour and information, given that the aforesaid breeder poultry farms and broiler poultry farms are located within the same vicinity, namely Malacca, Negri Sembilan and Johor,” said CAB Cakaran.

FBFI entered into SPAs with Sinmah Breeders Sdn Bhd, Sinmah Multifeed Sdn Bhd, Sinmah Livestocks Sdn Bhd, Bersatu Segar Sdn Bhd and Dee Huat Farming Sdn Bhd to acquire the broiler farms.

The purchase consideration of RM58.53mil represents a 10% premium to the market value of seven properties and 5% to the remaining two properties.

CAB Cakaran added that the acquisition may contribute positively to its future earnings, barring any unforeseen circumstances.

For the financial year ended Sept 30, 2016 (FY16), CAB Cakaran recorded revenue and a net profit of RM1.1bil and RM25.99mil, respectively.

Assuming that all treasury shares are retained in CAB Cakaran and none of the outstanding warrants exercised before the implementation of the proposed acquisition, the group’s net asset value will increase from RM184.17mil as at end-FY16 to RM220.84mil, while the net asset value per share will rise from RM1.22 to RM1.24.