PETALING JAYA: CCK Consolidated Holdings Bhd’s valuations have become attractive at 6.4 times price-to-earnings ratio (PER) after its share price tumbled nearly 32% year to date amid market downturn.
It is a Sarawak-based integrated poultry company, which is principally involved in poultry, prawn food service and retail businesses.
“ We suggest investors take a look at CCK again given its uninterrupted business during the movement control order (MCO) period; recession-proof business; and new earnings contribution from the two supermarkets in Kuching and Kota Kinabalu, which has not been imputed in our FY20-22 earnings forecasts,” said PublicInvest Research in a note.
Given that CCK’s operation falls under the essential sector, the research house expects it to see robust sales in the first quarter of the year as consumers stock up poultry products during the MCO period.
“We also expect to see a surge in egg demand ahead of the Hari Raya and Harvest Festival celebrations in May.”
CCK currently runs 59 stores in Sabah and Sarawak, accounting for 80% of its retail segment.
Some 50-60% of its products are in-house processed chicken, table eggs and beef/lamb.
Some 70% of its customer base is food and beverage operators while the remainder are retailers.
The company plans to open two supermarkets in Kuching and Kota Kinabalu this year with costs of RM1.5 million and RM2.5 million, respectively. They are expected to break even within a year. It also plans to open three more retail stores, with two in Sabah and one in Sarawak. The total capital expenditure for FY20 is about RM20-25 million.
Worth noting is that the CCK management has bought 400,000 shares thus far since the dip in its share price.
PublicInvest Research is maintaining its outperform call on CCK with an unchanged target price of 79 sen, which translates into a potential upside of 119%.
source https://www.thesundaily.my/business/take-a-look-at-cck-consolidated-again-publicinvest-research-tells-investors-HJ2193687
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