Company Background. CCK Consolidated’s (CCK) core businesses are retailing and poultry farming. Its fully integrated supply chain consists of feed mill, breeder farms, hatchery, broiler farms, layer farm, abattoirs and retail stores. The businesses are carried out primarily in Sarawak, Sabah and Indonesia. The group operates retail stores under the CCK Fresh Mart brand and supermarkets under the CCKLocal brand.

Prospects. (i) Expansion of the CCK retail network by adding new supermarkets and retail stores in East Malaysia (As of 3QFY22, the group comprises 63 CCK Fresh Mart retail stores, 3 CCKLocal Supermarkets and 6 CCK wholesale stores). (ii) The sales for CCK in-house manufactured brands of sausages and nuggets continues to be robust in Indonesia. (iii) Export volume in the prawn segment is improving due to the acquisition of new customers in Korea in addition to the traditional markets in Australia and Japan.

Financial Performance. In 9MFY22, CCK reported revenue of RM643m (+27.6% YoY) with a PAT of RM49m (+1.8x YoY). This was mainly due to the maiden contribution from a newly acquired subsidiary PT Bonanza that boosted the prawn segment, improved performances in the poultry and retail segments as well as the re-opening of food and beverage outlets driving wholesale volumes.

Technical Analysis. We believe buying interest for CCK is back after it pushed out from the 4-week bullish flag pattern with a long white candle on 22 Dec. With the stock pushing near its 52-week high, which coincides with its rising EMAs, the bullish momentum may be present now. A bullish bias may emerge above the RM0.70 level, with a stop-loss set at RM0.64, below the 50-day EMA. Towards the upside, the near-term resistance level is seen at RM0.80, followed by RM0.90.

Source: AmInvest Research - 3 Jan 2023