PETALING JAYA: Integrated poultry producer and supermarket operator CAB Cakaran
Corp Bhd considers the supply chain uncertainties and rising costs from geopolitical tensions to be manageable, says TA Research.
The company indicated that the impact from rising input costs remains manageable, supported by sufficient feed raw materials secured through the financial year ending Sept 30, 2026 (FY26).
Feed constitutes approximately 65% to 70% of total production costs, with the company now exposed to global price movements after acquiring Cargill Feed Sdn Bhd last November.
Malaysia’s feed inputs such as corn and soybean meal mostly come from South America, India, and Pakistan with prices trending upward since February, primarily driven by higher freight costs amid ongoing geopolitical tensions.
“Consequently, spot poultry feed prices have increased to approximately RM2,000 to RM2,500 per tonne, versus RM1,900 to RM2,100 per tonne prior to the Iran conflict.
“However, we do not expect any material earnings impact over the near term, supported by sufficient raw materials secured through FY26.
“We understand that sales volumes to key accounts are improving, while a potential uptick in broiler chicken prices could help alleviate rising operational cost pressures in the second half of FY26,” the research house said.
TA Research added that the company remains committed to expanding its retail network, now comprising 19 mid-sized supermarkets and six Kyros Kebab restaurants, to 100 outlets over the next five years with an estimated capital expenditure of RM1mil per outlet.
“Encouragingly, we understand that the retail segment turned profitable in the fourth quarter ended Sept 30, 2025 (4Q25) after reporting losses since FY23, while losses in the fast-food segment narrowed in 1Q26,” it noted.
The research house has maintained a “buy” recommendation on the stock with a revised target price of 82 sen from RM1.03 based on four times calendar 2027 earnings per share, with the valuation deemed undemanding.
“We lowered our target price-to-earnings (PER) ratio from its historical level due to geopolitical uncertainty and execution risk associated with the retail expansion, which we believe is defensible,” TA Research said.
The stock currently trades at an attractive 2027 PER of 2.6 times, below its historical three-year mean PER of four times.
