CCK Consolidated Holdings Bhd has been flying under the radar compared with its bigger listed peers, which are favoured by analysts following the removal of price controls and subsidies for chicken.

The stock rose and closed at its 2.5-month high of 84 sen on Dec 14, supported by a higher trading volume. Over the past year, CCK has gained 17.4% with it touching a high of 86 sen versus a low of 66 sen. More upside is likely to follow in the days ahead with signs of prices testing the 88 sen and 94 sen resistance level.

One factor that will perk up the stock would be the removal of chicken subsidies. On Oct 30, the government announced that subsidies and price controls for chicken would be discontinued from Nov 1, while subsidies for grade A, B, and C eggs will continue as per the existing mechanism.

Analysts said the move gives chicken poultry the flexibility to adjust prices based on market supply and demand dynamics and the ability to pass on increased production costs to consumers,

As it is, CCK, which processes poultry, seafood, and prawns, saw its 3QFY23 headline net profit declined by 24.3% YoY to RM20 million. This is mainly due to the high base effect from the one-off gain on disposal of investment property amounting to RM6 million.

After stripping off the one-off gain, CCK’s core net profit decreased by a smaller quantum (-3.3% YoY), largely due to a smaller amount of subsidy received from the Malaysian Government.

CCK also trades and retails cold storage goods and live stock farming as well as provides transportation services and veterinary supplies. 3QFY23 revenue increased 6.8% YoY to RM251.7 million.

This was driven by higher contribution from the retail (+10.1% YoY), poultry (+9.0% YoY) and prawn (+3.2% YoY) segments which helped to offset the lower sales from the food service segment (-20.7% YoY).

The better contribution from CCK’s retail segment was mainly underpinned by the stronger consumer demand and new store opening. The increase in export volumes to Japan, Taiwan, Korea and Hong Kong contributed to the higher contribution from the prawn segment.

On a cumulative 9 month basis, CCK’s core net profit came in at RM51.4 million, which is above consensus estimates. The poultry player saw stronger-than-expected sales especially from the retail segment, and lower-than-expected raw material cost. Investors should look forward to CCK’s outlook, which is driven by resilient demand for consumer staple products and lower feed cost.

Looking at the CCK Daily Chart, here's what we found:

1. There's a red box showing a shakeout moment. It's a good sign because it suggests that weak hands has been removed.

2. Price trying resistance with increasing volume.