CAB Cakaran plans to boost its overseas revenue
Poultry player eyeing Japan, Singapore and the Middle East
PETALING JAYA: After its foray into Indonesia via its joint venture with the Salim Group, integrated poultry player CAB Cakaran Corp Bhd is now eyeing Japan, Singapore and the Middle East as it looks to boost its overseas revenue contribution to 40% in the next five years.
Group managing director Chris Chuah Hoon Phong told StarBiz that the company was looking at exporting more frozen halal chicken meat and processed food products to Singapore, Japan and the Middle East.
“As one of the leading broiler companies in Malaysia, we have grown our market share from 7.5% two years ago to 12%.
“We will be focusing on our business in Indonesia in the next five years and explore another business opportunity in the region. We are contemplating to export more frozen halal chicken meat and processed food products to the three markets,” he added.
CAB’s collaboration with the Salim Group would entail the construction of the broiler and layer farm which is expected to commence within this year and it is targeting 4.5 million birds and three million eggs per month.
CAB, which holds a 10% stake in the joint venture, has an option to raise the stake to 30% over the next five years.
Asked if it would expand the poultry business in Indonesia, Chuah said although there is huge potential in this market, the company would be cautious in its expansion plan to protect its investment.
The broiler and layer farm in Indonesia would take three years to complete, he said, adding that any expansion should come after that.
“The collaboration with Salim Group would be the next growth phase for CAB Cakaran underpinned by the huge Indonesian market that has vast potential for the poultry industry. We shall be able to see the revenue and profit contribution from this venture in the financial year ending Sept 30, 2019 (FY2019). The contribution in FY2019 will be gradual and it will be higher for the subsequent financial years,” he added.
As to whether CAB Cakaran would increase its stake in the joint venture with the Salim Group, Chuah said it would depend on the company’s cash flow and financing in the coming years.
“We will let the construction of the broiler and layer farm to begin and the business to be in operation before deciding on the stake increase. We have five years to decide, thus we are not in a hurry.”
On further acquisitions, he said there is a possibility, particularly in Asia.
“We have been on the lookout for a potential acquisition, but nothing is confirmed at the moment. It is too early to put a timeline for our next acquisition but we are constantly looking around for potential targets,” he said.
On its overseas contribution, he noted that the current revenue contribution from over- seas business is about 20% to 25%. The ideal revenue contribution in the next five years would be 40%, he said, adding that the major revenue booster would be its Indonesian business.
Chuah was optimistic of a better financial performance for this year as CAB Cakaran would be recognising the full revenue contribution from its subsidiary Farm’s Best Food Industries Sdn Bhd, which could potentially bring in higher revenue and profit.
“Apart from this, we are expanding our production capacity, which should see an increase eventually. Our current capacity of broiler and day-old-chick stands at seven million birds and nine million birds per month respectively, which should see an increase to 7.5 million birds and 10 million birds per month by the end of 2018,” he said.
CAB Cakaran posted a 15.9% increase in net profit to RM11.5mil for the second quarter ended March 31, on the back of strong revenue growth of 21.7% to RM424.9mil.
For the quarter, earnings per share increased to 1.86 sen from 1.77 sen previously. The higher revenue, however, was accompanied by a higher increase in the cost of sales and distribution.