• CCK posted a 1HFY26 CNP of RM30.7m (-11.4% YoY), after adjusting for CCK's 60% equity interest in the RM16.0m one-off write-off from the Cikupa (Indonesia) fire incident. Results came in below our expectations, meeting 41.6% of our full-year forecast and 42.5% of consensus estimates.
• We cut our FY26F/FY27F core net profit forecasts by 15.0%/12.5%, on the back of the continued absence of government subsidies, ongoing feed cost pressures, and a more gradual recovery expected at CCK's Indonesian operations.
• Maintain BUY with a lower TP of RM1.17 (from RM1.34), based on an unchanged 9.0x FY27F P/E applied to our revised FY27F EPS of 13.0 sen (from 14.8 sen).
Results below expectations. Excluding gain on disposal of PPE (-RM0.01m), property, plant and equipment written off (+RM5.3m), fair value gain on investment securities (-RM0.5m), inventories written off (+RM3.7m) and other directly attributable costs (+RM0.5m) arising from the fire incident at CCK's Cikupa (Indonesia) manufacturing facility on 28 May 2026 (adjusted for CCK's 60% equity interest in the affected entity), CCK reported 2QFY26 core net profit (CNP) of RM14.1m (-20.8% YoY; -15.0% QoQ). This brings cumulative 1HFY26 CNP to RM30.7m, accounting for 42% of our full-year forecast and 43% of consensus estimates. Results came in below our expectations, dragged by the fire-related disruption to CCK's Indonesian operations, though earnings continued to be supported by resilient retail demand, partly offset by weaker prawn exports.
YoY. Revenue declined 3.0% YoY to RM250.7m, while CNP fell 20.8% YoY to RM14.1m. The weaker revenue was mainly due to lower prawn sales and reduced contributions from Indonesian operations following the Cikupa fire incident and IDR depreciation, partly offset by resilient domestic retail demand and stronger food service sales. Retail revenue was broadly flat, while poultry remained stable, prawn revenue fell 28.2%, and food service grew 19.2%. Meanwhile, retail swung to an LBT of RM5.2m due to the one-off fire-related write-off, while poultry PBT declined due to the absence of government subsidies.
QoQ. Revenue declined 4.7% QoQ to RM250.7m, while CNP fell 15.0% QoQ to RM14.1m. The revenue moderation was mainly due to lower retail contribution, particularly from Indonesian operations following the Cikupa fire incident, partly cushioned by improved prawn and food service sales. Retail revenue eased to RM198.6m (1QFY26: RM216.2m) on lower Indonesian production volumes, while prawn revenue improved to RM19.5m (1QFY26: RM16.5m) on better export sales and poultry remained stable. Meanwhile, the retail segment swung to a LBT of RM5.2m (1QFY26: PBT of RM16.3m), mainly due to the one-off fire-related write-off, while poultry PBT eased to RM3.9m (1QFY26: RM6.1m) due to input cost timing differences.
Outlook. We expect near-term earnings to remain pressured as the Cikupa facility continues to recover from the fire incident. While a full recovery at Cikupa may take time, the Boyolali food processing facility remains on track to commence operations in 4QFY26 and should provide substantially greater capacity than that affected by the fire, increasingly underpinning the Group’s earnings recovery in FY27. The Pontianak facility continues to operate at full capacity to support demand in the interim. Longer term, we continue to favour CCK for its dominant East Malaysia retail network, vertically integrated operations and defensive consumer staples exposure, although key risks include weaker prawn export demand, feed cost volatility and a slower-than-expected recovery of its Indonesian operations.
Earnings Revision. We cut our FY26F/FY27F core net profit forecasts by 15.0%/12.5% to RM62.7m/RM81.9m (from RM73.8m/RM93.6m) respectively, on the back of the continued absence of government subsidies for eggs and broilers, ongoing feed cost pressures, and a more gradual recovery expected at CCK's Indonesian operations following the Cikupa fire incident. While we view the fire-related write-off itself as a one-off, we believe a more conservative earnings base is warranted until there is greater visibility on the pace of the Cikupa recovery and the Boyolali facility's ramp-up. We also introduce our FY28F core net profit estimate of RM95.0m (+16.0% YoY), rolling forward our forecasts to reflect a full year of contribution from the Boyolali facility.
Valuation & Recommendation. We maintain our BUY recommendation but lower our TP to RM1.17 (from RM1.34), following our earnings revision. Our TP remains pegged to an unchanged 9.0x FY27F P/E, applied to our revised FY27F EPS of 13.0 sen (from 14.8 sen). We continue to see upside from CCK's dominant East Malaysia retail network, vertically integrated operations and the earnings recovery potential from the Boyolali facility.
Risks. Key risks include a slower-than-expected recovery at the Cikupa facility, delays to the Boyolali facility commissioning, volatility in poultry selling prices and feed costs, currency fluctuations, and weaker export demand for the prawn segment.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.009122 | 4.041218 |
| EUR | 4.693152 | 4.697974 |
| CNY | 0.598662 | 0.599280 |
| HKD | 0.511644 | 0.515244 |
| SGD | 3.158149 | 3.180401 |