CCK: Indonesia Expansion Fuels Optimism Amidst Recent Earnings Miss

PublicInvest Research has maintained its “Outperform” call on CCK Consolidated, revising its target price upwards to RM1.50 from RM1.45. This positive outlook comes despite the company’s fourth quarter and full-year FY25 core profit after tax and minority interests (PATAMI) falling below expectations, with the investment bank anticipating a significant earnings turnaround primarily driven by the upcoming operationalisation of its new food processing facility in Indonesia.

Performance Review

For the fourth quarter of FY25, CCK Consolidated’s core PATAMI declined by a notable 31.5% year-on-year to RM13.9 million. This downturn was largely attributed to lower contributions across major operating segments and a higher effective tax rate. Full-year FY25 core PATAMI of RM66.7 million also missed both PublicInvest’s and consensus estimates, reaching only 89% and 90% of their respective forecasts.

Revenue for 4QFY25 saw a marginal decrease of 1.2% year-on-year, totaling RM264.2 million. This was primarily due to weaker sales performance in the poultry, prawn, and food service segments. While the retail segment demonstrated growth of 2.1% year-on-year, bolstered by robust consumer demand during year-end festive spending, this was insufficient to offset the broader decline. The underperformance in the retail segment was particularly noted, impacted by strategic pricing adjustments in response to intensified competition among domestic retailers.

Future Outlook and Growth Drivers

Looking ahead to FY26F, PublicInvest Research expects a robust improvement in CCK’s earnings. This optimism is predominantly fueled by the impending commencement of the company’s new food processing facility in Central Java, Indonesia. The facility is set to begin operations in the second quarter of calendar year 2026, with the installation of new production lines well underway. This expansion is expected to unlock new sales channels across the region, significantly boosting future revenue and profitability.

Domestically, CCK is poised to benefit from several factors, including rising household disposable income, supported by recent government initiatives like MySARA and MyKasih, which should translate into stronger consumer spending. Furthermore, an anticipated decline in feed costs (for corn and soybean) coupled with the appreciation of the Ringgit is projected to lead to an uptick in CCK’s overall profit margins.

Despite revising down its FY26-27F earnings forecast by 14% to account for weaker domestic retail contributions, PublicInvest Research maintains its positive long-term view. The valuation base year has been rolled over to FY27F, underpinning the revised target price of RM1.50, based on 10x FY27F EPS. The positive outlook is largely sustained by the strong prospects of the Indonesian operations.