CCK’s 4QFY22 net profit increased by 81% YoY to RM13m, mainly driven by stronger results from its retail and prawn segments on the back of an overall recovery in consumer demand. After adjusting for one-off gains, CCK’s full-year FY22 core net profit came in at RM52.3m. Results was in-line with our and consensus estimates, accounting for 102% and 100% respectively. We continue to like CCK for the defensive nature of its business, robust demand for poultry products as well as stronger contribution from its Indonesia operations. We maintain our Outperform call and TP of RM0.90, which is based on 10x FY23F EPS.
- 4QFY22 revenue increased 25.2% YoY to RM234.9m, mainly lifted by the recovery in consumer demand. Prawn segment revenue jumped by 299.3% YoY, thanks to the contribution from the recently acquired PT Bonanza, which also increased CCK’s export sales to Japan and Taiwan. Retail segment revenue grew by 9.8% YoY, driven by the more matured contribution from its new stores (CCKLocal super markets and CCK Fresh Mart), further supported by stronger demand from hotels, restaurants and café (Horeca) outlets. The poultry segment also benefitted from the higher demand from Horeca outlets and improved consumer sentiment, leading to a 46.2% YoY increase in sales.
- 4QFY22 core net profit more than doubled to RM12.5m, as all segments recorded stronger performance. Retail segment EBIT grew by 46.4% YoY on a more favourable product mix and better operational efficiency. Prawn segment EBIT jumped by >100% YoY, mainly attributable to the greater economies of scale post acquisition of PT Bonanza. The poultry segment managed to turn around, largely driven by effective cost control measures, favourable product mix and the subsidy scheme from the government.
- Outlook. Given the defensive nature of CCK’s business, we foresee stronger sales growth amid the rising cost of living, mainly premised on potentially higher in-house consumption as compared to dine out. In addition, we think that demand for poultry products will remain resilient, as they are still the most affordable source of protein. Furthermore, we foresee better performance from its Indonesian operations, given the sturdy demand for in-house manufactured processed products and greater economies of scale post acquisition of PT Bonanza, which should lift margins for the prawn segment. All told, we expect CCK to post stronger earnings going forward.
Source: PublicInvest Research - 23 Feb 2023