Results

• CCK Consolidated Holdings Berhad’s (CCK) surged 127.3% qoq and 326.2% yoy to stand at RM26.4m.  Meanwhile, revenue stood at RM235.6m which also surged by 12.2% qoq and 36.0% yoy.

• Results beyond expectation. 9MFY22 net profit of  RM49.1m (+178.9% yoy) has exceeded by 6%/18% of  our/consensus full year forecast. Also, the revenue entails  79%/80% of our/consensus full year forecast.

• Solid 9MFY22 revenue which cumulatively increased by  27.6% yoy to RM643.1m compared to RM503.8m from the  corresponding period last year.

• Robust contribution from all segments. The significant  growth in net profit resulted from many factors, namely 1) the  contribution from newly acquired subsidiary PT Bonanza which  improved the performance of prawn segment, 2) recovering of  consumer demand which boosted the poultry and retail  segments, 3) and also re-opening of schools in Sarawak that  drove the performance of food service segment.

• Surged in Prawn Segment. Revenue soared by 357.6% qoq  and 458.7% yoy to RM24.2m for 3QFY22. This significant  growth was due to the contribution from PT Bonanza, a newly  acquired subsidiary which the acquisition was completed in  July 2022. Due to the performance of PT Bonanza, it has  boosted the overall segment export volume to Japan and  Taiwan. Worth mentioning, the export to other markets  continue to gain momentum. Meanwhile, the domestic sales  through its own retail channel increases in tandem with the  performance of the retail segment.

• Retail segment posted a revenue of RM177.8m which grew  by 3.4% qoq and 20.5% yoy from previous quarter (2QFY22:  RM172.0m). The steady revenue growth was attributable to  the contribution from three CCKLocal supermarkets and four  CCK Fresh Mart retail store. Overall, recovery in consumer  demand coupled with the re-opening of food and beverage  outlets spurred the wholesale volume which also boosted the  performance in retail segment.

Comments

• Optimistic on future prospects. Moving forward, we are  optimistic and continue to expect a strong and stable sales from the Group especially in the retail and prawn segments, as  well as the food service segment. Not to forget, the retail and  wholesale channels are in a bright outlook especially after the  Group has acquired PT Bonanza, which boosted the overall  segment export volumes to Japan and Taiwan.

Earnings Outlook / Revision

• We upgrade our FY22F and FY23F net profit estimates  by 23% and 17% to RM57.2m and RM60.4m,  respectively as we envisage better earnings from its  Prawn and Food Service as well as Retail segments.

Valuation and Recommendation

• Maintain BUY with a higher target price of RM0.78 (from RM0.67 previously) following our earnings  upgrade. Our valuation is now pegged at PE multiple of 7.8x  FY23F EPS of 10 sen which is below its 4-year mean PE of  11.1x but slightly higher than its -1.5 standard deviation of  7.6x PE multiple. Our target price represents 23.8% upside  from the current share price of RM0.63.  

Source: JF Apex Securities Research - 25 Nov 2022