CAB Cakaran’s Q2 FY2025: Strong Poultry Performance Drives Profit Growth Amidst Market Headwinds
Greetings, fellow investors and market watchers! Today, we’re diving into the latest financial report from CAB Cakaran Corporation Berhad (CAB Cakaran) for its second quarter ended 31 March 2025. This report offers a fascinating look into a key player in Malaysia’s integrated poultry industry, revealing a company that’s navigating a dynamic market with resilience and strategic focus. While revenue saw a slight dip, the real story here is the impressive surge in operating profit, primarily fueled by its core poultry division. This quarter also saw the company’s commitment to shareholder returns with the payment of a final dividend for the previous financial year. Let’s unpack the details and see what this means for CAB Cakaran’s journey ahead.
Core Data Highlights: A Closer Look at Performance
CAB Cakaran’s Q2 FY2025 results present a mixed but largely positive picture, showcasing the strength of its integrated poultry operations despite broader market challenges. Here’s a breakdown of the key financial figures:
Q2 FY2025 (3 months ended 31 March 2025)
Revenue: RM573.72 million
Operating Profit: RM40.57 million
Profit Before Tax: RM32.36 million
Profit Attributable to Owners: RM19.75 million
Basic Earnings Per Share: 2.82 sen
Q2 FY2024 (3 months ended 31 March 2024)
Revenue: RM574.85 million
Operating Profit: RM28.70 million
Profit Before Tax: RM29.62 million
Profit Attributable to Owners: RM15.10 million
Basic Earnings Per Share: 2.15 sen
Year-on-Year Performance Analysis (Q2 FY2025 vs. Q2 FY2024)
- Revenue: A marginal decrease of 0.20% from RM574.85 million to RM573.72 million. While seemingly flat, this reflects the challenging market conditions.
- Operating Profit: A significant leap of 41.35% from RM28.70 million to RM40.57 million. This impressive growth highlights improved operational efficiency and cost management.
- Profit Before Tax: Increased by 9.25% to RM32.36 million, up from RM29.62 million. The growth was moderated by a fair value loss on biological assets, which amounted to RM3.8 million in the current quarter, compared to a gain of RM5.06 million in the same period last year.
- Profit Attributable to Owners: Surged by 30.82% to RM19.75 million, up from RM15.10 million. This translates directly to better returns for shareholders.
- Basic Earnings Per Share (EPS): Rose by 31.16% to 2.82 sen, compared to 2.15 sen previously, reflecting the higher profitability per share.
Quarter-on-Quarter Performance Analysis (Q2 FY2025 vs. Q1 FY2025)
Comparing the current quarter to the immediate preceding quarter (Q1 FY2025), we observe a slight revenue decline but improved gross profit, though profit before tax saw a dip:
| Metric | Q2 FY2025 (RM’000) | Q1 FY2025 (RM’000) | Variance (RM’000) | Variance (%) |
|---|---|---|---|---|
| Revenue | 573,716 | 593,610 | (19,894) | (3.35) |
| Gross Profit | 74,952 | 73,630 | 1,322 | 1.80 |
| Profit Before Tax | 32,357 | 45,304 | (12,947) | (28.58) |
Revenue declined due to reduced sales of further processed products and lower feed sales volume, partially offset by higher broiler sales. Despite this, gross profit improved, driven by higher average selling prices for broilers and chicks, alongside a 0.44% reduction in feed costs. The drop in profit before tax was mainly attributed to a lower share of profit from joint ventures, increased administrative expenses, a loss from expected credit loss remeasurement, and a significant RM3.8 million fair value loss on biological assets.
Segmental Performance: The Driving Forces
The integrated poultry division continued to be the star performer, with its operating profit soaring by 48.60% year-on-year. This remarkable improvement was primarily due to an 11% reduction in feed costs, a crucial input for poultry farming. Additionally, higher average selling prices for broilers and chicks, increasing by 6% and 4% respectively, further bolstered the division’s profitability. This demonstrates CAB Cakaran’s effective cost management and ability to capitalize on favourable market prices within its core business.
In contrast, the retail and fast-food divisions faced headwinds. The retail division recorded lower revenue and an operating loss of RM0.60 million, mainly due to reduced sales from its Kuantan outlets and intense market competition during the Puasa month. Similarly, the fast-food division saw lower revenue of RM0.82 million and a widened operating loss of RM0.27 million, impacted by reduced consumer spending during the same period and increased cost of goods sold.
Financial Health: A Stable Position
As at 31 March 2025, CAB Cakaran’s balance sheet reflects a stable financial position:
- Total Assets: Increased to RM1,605.04 million from RM1,558.67 million as at 30 September 2024.
- Total Equity: Grew to RM916.30 million from RM860.81 million, indicating stronger shareholder value.
- Total Liabilities: Decreased to RM688.74 million from RM697.86 million, showing a slight reduction in overall debt.
- Net Assets Per Share: Improved to RM1.04 from RM0.97.
- Total Borrowings: Decreased to RM340.35 million from RM359.56 million as at 30 September 2024, mainly due to repayment of term loans and lower utilization of bankers’ acceptances. This reduction in borrowings is a positive sign for financial stability.
The Group’s net cash generated from operating activities remained robust at RM76.24 million for the six months ended 31 March 2025, comparable to RM76.17 million in the prior year, indicating healthy operational cash flow generation.
Risk and Prospect Analysis: Navigating the Future
The poultry market in Malaysia is expected to remain resilient, buoyed by consistent demand for poultry products as an affordable and essential protein source. Factors such as population growth, urbanisation, and a dietary shift towards protein-rich meals are projected to sustain robust consumption. Consequently, broiler selling prices are anticipated to remain stable, providing a steady foundation for CAB Cakaran’s core business.
However, the industry faces several external pressures. The discontinuation of government subsidies has already squeezed profit margins for local producers. Additionally, an increase in frozen chicken imports, particularly from Thailand, is creating downward pressure on domestic poultry prices, adding a competitive challenge for local players like CAB Cakaran.
Furthermore, after a period of decline, feed costs are now expected to trend upward. Given that feed constitutes the largest cost component in poultry production, this could pose a significant challenge to profitability in the near term. CAB Cakaran’s success in mitigating feed costs in the current quarter will be crucial to observe in future reports.
Despite these challenges, the Board remains optimistic about the Group’s prospects for the coming quarter. They are committed to closely monitoring the operating landscape and proactively managing the Group’s operational and financial performance. This proactive approach aims to support sustainable growth and long-term value creation in a dynamic market environment.
Summary and Outlook
CAB Cakaran’s Q2 FY2025 report demonstrates a company with strong operational foundations, particularly within its integrated poultry division. Despite a slight dip in overall revenue, the significant increase in operating profit and profit attributable to owners is a testament to effective cost management and improved selling prices within its core business. The reduction in total borrowings also signals a prudent approach to financial health.
While the company faces challenges from discontinued subsidies, increased imports, and anticipated rising feed costs, its strategic focus on operational efficiency and market monitoring positions it to navigate these headwinds. The long-term demand for poultry in Malaysia remains a positive underlying factor.
Key points to consider for the future include:
- The Group’s ability to sustain lower feed costs and maintain favorable broiler and chick selling prices.
- The performance turnaround of the retail and fast-food divisions amidst stiff competition and changing consumer spending habits.
- The impact of increased frozen chicken imports on domestic pricing and market share.
- The effectiveness of the Board’s proactive management strategies in mitigating external pressures and driving sustainable growth.
Final Thoughts and Your Perspective
From my perspective, CAB Cakaran’s latest report highlights the critical importance of operational efficiency in a commodity-driven business. Their success in reducing feed costs and optimizing selling prices in the poultry segment has been a clear differentiator this quarter. While the challenges in the retail and fast-food segments are notable, the core business’s strength provides a solid base.
What are your thoughts on CAB Cakaran’s performance? Do you believe the company can maintain this growth momentum in its integrated poultry division despite the anticipated rise in feed costs and increased competition? Share your views and analysis in the comments section below – let’s discuss!
For more in-depth analyses of Malaysian companies and market trends, be sure to explore our other articles.
