CCK Consolidated Bhd has taken great strides on the past year, more than doubling its market cap. The counter was trading at a low of 78 sen last year before surging to a new high of RM1.86 recently.

Optimism in poultry stocks have pushed counters such as CCK hitting record highs as on the back of much better outlook. This is because lower input costs for chicken feed is anticipated as the prices of soybean meal and corn have fallen to their lowest levels since late 2020, thus contributing to the margin expansion of poultry players.

In addition, the smaller Sarawak-based CCK, is trading at a trailing price earnings multiple of 11.01 times and forward PE of 11.7 times. Apex Securities has a target price of RM1.48 on CCK, pegged at a multiple of 10.6 times FY2025 forecast EPS of 14 sen. Meanwhile Public Invest Research has ascribed a PER multiple of nine times to FY2025 forecast EPS of 13.4 sen, for a target price of RM1.20.

CCK posted an 18% increase in its net profit rose to RM19.77 million in the second quarter ended June 30, 2024 from RM16.76 million a year ago, thanks to a better performance by its poultry segment.

Revenue for the quarter rose 9.9% to RM271.57 million from RM247.11 million a year earlier boosted by better performances from its retail, poultry and prawn segments, which was offset by a decline in the food service segment.

The retail segment’s profit before tax (PBT) grew 2.3% year-on-year while revenue increased 9% to RM143.5 million, mainly driven by mature contributions from established retail network and improved consumer demand.

The poultry segment posted a six-fold increase in PBT to RM3.91 million as revenue rose 18.3% to RM95.8 million on the back of rising demand from institutional clients and its own retail stores.

The prawn segment saw a 17.1% increase in PBT to RM3.13 million, while revenue rose 8.8% to RM28.8 million, supported by export sales and internal retail channels.

The food service segment’s PBT, however, fell 65% to RM376,000 while revenue fell 13.1% to RM5.6 million, mainly due to lower sales volume from government schools in Sarawak.

Moving forward, the company is confident on its outlook given the continued expansion of its retail network, along with growth opportunities in markets like Indonesia for its in-house products.

Investors should take advantage of the undemanding valuations of CCK, which stand to benefit from better demand as the economy improves.