| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Leading investment analysts have issued a ‘BUY’ recommendation, setting a target price of RM0.25 (+25.0%), following a robust recovery in core earnings and a clear trajectory for sustainable growth. The positive outlook is primarily driven by strategic acquisitions, significant capacity expansion, and an ambitious entry into new regional markets.
Performance Review and Earnings Trajectory
The company reported a strong turnaround, with core earnings increasing by a solid 20.1% year-on-year in FY25. This performance was bolstered by enhanced contributions from its integrated poultry and fast-food segments, coupled with improved margins attributed to lower feed costs. This rebound follows a decline in core earnings in FY24, which was impacted by softer average selling prices for products, reduced government subsidies, and a higher effective tax rate. Looking ahead, analysts project continued growth in core earnings, with an anticipated increase of 30.9%, 20.3%, and 16.9% for FY26, FY27, and FY28, respectively.
Strategic Integration and Capacity Expansion
A pivotal factor underpinning the optimistic forecast is the strategic acquisition of Cargill Feed Sdn Bhd (CFSB), completed in late 2025. This move is expected to significantly enhance cost efficiency by internalising feed production, thereby reducing reliance on third-party suppliers and mitigating raw material price volatility. CFSB is projected to contribute RM13.0 million to the company’s bottom line post-acquisition, growing to RM21.0 million in net profit by CY27.
Furthermore, the company’s high-margin food processing segment is operating at approximately 90% utilisation and is set for substantial capacity expansion. Plans include a 150% increase with a new plant by 2QFY26, alongside an accelerated retail rollout targeting 25 supermarkets by FY26.
Indonesia Market Entry and Future Outlook
The company has also embarked on a significant long-awaited expansion into the Indonesian market through a joint venture with the Salim Group, a major conglomerate. This partnership leverages the Salim Group’s extensive retail and distribution network, including over 22,000 Indomaret outlets and 695 KFC restaurants, providing immediate market access. Phase I involves establishing a food production facility by 2QCY26, with contributions expected from 2HCY26. Phase 2 will see the development of fully integrated upstream poultry operations in Pulau Jawa, targeting substantial production capacities of 4.5 million birds/month and 3.0 million eggs/day.
Analysts highlight that these strategic initiatives, combined with strong domestic demand and a focus on value-added products, are set to reinforce market leadership and drive robust bottom-line growth. The company also aims to expand its retail footprint to 100-150 outlets over the next 5-10 years, projecting an organic net profit CAGR of 12.9% to reach RM130 million by 2029. While risks such as livestock disease outbreaks and raw material price fluctuations persist, management is implementing mitigation strategies, including biosecurity protocols and vertical integration.
The ‘BUY’ recommendation, with a target price of RM0.25, represents a significant upside from the last traded price of RM0.20, reflecting confidence in the company’s strategic direction and anticipated strong financial performance.
