CCK Consolidated Holdings Bhd - Within Expectations
Fri, 29-May-2026 07:29 am
by Research Team • Apex Research

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CCK (7035)

Target Price (RM)

1.34

Recommendation

Buy

  • CCK posted a 1QFY26 CNP of RM16.6m (-1.3% YoY, 12.0% QoQ). The results came in within our expectations, meeting 22% of our full-year forecast and 21% of consensus estimates.

  • We expect CCK to deliver resilient earnings into FY26, supported by its defensive retail exposure and vertically integrated operations, with earnings recovery expected in 4QFY26 following the commencement of the Boyolali facility.

  • Maintain BUY with a lower TP of RM1.34 (from RM1.62), based on 9.0x FY27F EPS of 14.8sen (from 13.5x FY26F EPS of 12.0sen), which remains below the Group’s 3-year historical mean forward PE. 

Results within expectations. Excluding gain on PPE (-RM0.3m) and other EIs (-RM0.1m), CCK reported a 1QFY26 CNP of RM16.6m (-1.3% YoY, 12.0% QoQ). The results were within our expectations, meeting 22% of our full-year forecast and 21% of consensus estimates. Earnings continued to be supported by resilient retail demand and improving poultry margins, partly offset by weaker prawn exports.

 

YoY. Revenue was broadly stable at RM263.1m (-0.3%) as stronger retail and food service contributions offset weaker prawn segment sales. Retail revenue increased 2.9% on resilient consumer demand, while food service revenue rose 22.0% driven by higher sales to government schools in Sarawak. However, prawn revenue declined 29.1% due to softer export demand from Japan, Korea and China. Segment operating profit declined 2.7% mainly due to the absence of egg and broiler subsidies during the quarter. Nevertheless, poultry operating margin improved to 23.6% (1QFY25: 20.2%), supported by lower feed costs and improving operational efficiencies.

 

QoQ. Revenue remained broadly flattish (-0.4%) as resilient retail sales offset weaker poultry and food service contributions. Retail revenue remained firm (+0.7%), supported by healthy demand and stable sales of in-house processed food products. Meanwhile, poultry and food service revenue declined 7.7% and 5.8% respectively due to softer institutional demand and lower sales to government schools. Despite largely stable operating performance, CNP increased 12.0% supported by lower taxation, lower minority interests and a modest improvement in gross profit margin to 22.9% (4QFY25: 22.8%) driven by a more favourable retail product mix.

 

Outlook. We expect near-term earnings to moderate towards end-2QFY26 following the temporary disruption at its Indonesian operations arising from the recent fire incident. Nevertheless, we believe the overall impact should remain manageable, as the Indonesian segment contributes approximately 10% of group revenue and the disruption is expected to be temporary in nature. More importantly, we expect earnings momentum to recover in 4QFY26, supported by the commencement of the new Boyolali food processing facility in Central Java, which should help restore production capacity and improve operational efficiencies. Longer term, we continue to favour CCK for its dominant retail network in East Malaysia, vertically integrated operations and defensive consumer staples exposure.

 

Earnings Revision. We are maintaining our earnings forecasts at this juncture as the 1QFY26 results came in broadly within our expectations and management’s operational guidance remains largely unchanged. 

 

Valuation. We maintain our BUY call with a lower TP of RM1.34 (from RM1.62) after rolling forward our valuation base to FY27F. Our TP is based on 9.0x FY27F EPS of 14.8sen (from 13.5x FY26F EPS of 12.0sen). The applied multiple remains below the Group’s 3-year historical mean forward PE, reflecting near-term earnings uncertainties from weaker prawn exports and ongoing cost pressures.

 

Risks. Key risks include volatility in poultry selling prices and feed costs, currency fluctuations and weaker export demand for the prawn segment.

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