not vested
Trading Buy: CCK-7035
Safe to put your eggs in this basket
(Last price: RM0.535, Potential upside +18.7%)
Company Profile
Listed in Dec 97, CCK is a fully integrated supply chain consists of feedmill, breeder farms, hatchery, broiler farms, layer farm, abattoir and retail stores. The businesses are carried out primarily in Sarawak, Sabah and Indonesia (Jakarta and Pontianak).CCK also involves in prawn agriculture and prawn processing, largely for export.
Trading Catalyst
Wide distribution network of 59 self-owned retail outlets and supermarkets (planning to open in Kuching and KK by 2020), leading to consistent superior margins (142% above industry peers’ average) and captive market in East Malaysia and Indonesia (contributed 16.3% of total revenue in 9M19 vs. 5.7% in 9M18).
Good defensive proxy to rising geopolitical tensions in Middle East (after the US killed a top Iranian military general) and Korean peninsula (after the US refused to lift the sanctions on North Korea).
Anticipate a seasonally good 4Q19 and 1Q20 amid higher demand for poultry products during Christmas and CNY celebrations.
Singapore wholesalers have resorted to importing Malaysian eggs after Ukraine import suspension, eventually lifting eggs’ demand.
Technical View
Resistance: RM0.545 / RM0.580 / RM0.635
Support: RM0.520 / RM0.500
Cut loss: RM0.490
Key Financial Stats
Valuation is undemanding at 9.6x FY20 P/E, 41% lower than its peers.
Source: Bloomberg, HLIB