KUALA LUMPUR: The outlook for CCK Consolidated Bhd this year may be looking more rosy as the prices of eggs and broilers have risen while feedstock cost has dropped significantly over recent months.
In a research note, PublicInvest research said it remained upbeat on the company's FY19 prospects despite the its FY18 results slightly missing its expectations.
CCK yesterday announced a profit of RM28mil for FY18, which was broadly in line with consensus estimates.
4QFY18 core net profit fell 55.1% year-on-year to RM4mil due to weaker contribution from its poultry and retail segments.
Its two biggest earning segments were hit by higher feed cost and the weaker ringgit respectively.
"Poultry earnings fell from RM2.8m to RM0.6m, hit by higher feed cost as margins declined from 13.9% to 2.0%.
"Retail earnings dropped from RM6.7m to RM5.0m as weaker Ringgit resulted in an increase in cost of imports of frozen products, particularly beef and lamb from Australia," it said.
PublicInvest noted also that the prawn segment also declined from stiff competition from Indian prawn suppliers.
In terms of revenue, the group saw a 1.4% y-o-y decline in sales as weaker retail sales of RM111.6mil were cushioned by stronger poultry sales, which rose 49.2% to RM30mil due mainly to an increase in egg prices.
Prawn sales increased slightly to RM7.2mil while food segment sales also rose 14.1% y-o-y to RM3.1mil, due to the opening of CCK's first F&B outlet.
PublicInvest thinks the lower feed cost will be more reflective in the coming months following gradual drops since May.
"Corn price has remained steady while soybean meal price has shrunk more than 22%, likely due to lower demand from China," it said.
The ringgit meanwhile has strengthened 3% since mid-Dec, which would help ease operating cost.
PublicInvest maintained its outperform call on CCK with an unchanged target price of 88 sen per share.
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