Good Morning All,
We issued a 3Q26 results note on our coverage stock CAB Cakaran Corporation Berhad: Your Trusted Guide to Global Trading | Malacca Securities (mplusonline.com)
📌 Earnings below expectations. CAB registered a 3QFY26 core PATMI of RM21.4m (- 5.9% YoY, -1.6% QoQ). For 9MFY26, core PATMI reached RM70.9m (+0.4% YoY), accounting for 62.3% of our FY26f earnings forecast of RM113.9m and 67.3% of consensus estimate of RM105.4m. The results came in below expectations, primarily dragged down by lower ASPs for broilers, chicks, and feed, and also lower organic sales volumes.
📌 YoY. Revenue for 3QFY26 rose 7.5% YoY to RM611.8m (vs RM569.2m in 3QFY25), underpinned by higher feed sales contributed by newly acquired subsidiaries, CAB Feed Sdn Bhd and Desa CAB Sdn Bhd. However, core PATMI slipped 5.9% YoY from RM22.7m in 3QFY25 to RM21.4m in 3QFY26, dragged by lower operating profit for the Integrated Poultry segment as well as higher operating losses from both the Retail and also Fast-Food segments.
📌 QoQ. On a sequential basis, revenue fell 2.3% QoQ from RM625.9m in 2QFY26 to RM611.8m in 3QFY26. This was mainly driven by lower feed sales to contract farmers and broiler sales, as well as lower sales across most Retail outlets. As a result, core PATMI dipped slightly by 1.6% QoQ to RM21.4m, as compared to RM21.7m in 2QFY26.
📌 YTD. For 9MFY26, CAB registered a cumulative revenue of RM1.9bn, up 6.9% YoY compared to RM1.7bn in 9MFY25, while core PATMI remained virtually flat at RM70.9m (+0.4% YoY vs RM70.7m in 9MFY25). Growth was primarily sustained by M&A top-line consolidation from CAB Feed.
Segmental weakness across Integrated Poultry and Retail segments. Operating profit for Integrated Poultry dropped 18.1% YoY to RM36.8m (vs RM45.0m in 3QFY25) due to lower selling prices of chicks, feed, and broilers. Meanwhile, Retail operating losses widened 17.8% YoY to RM0.5m, as store sales volumes contracted amid intensified retail market competition.
📌 Fast Food drag and further delay in Salim JV. Fast Food operating losses widened to RM0.5m (vs RM0.4m loss in 3QFY25) following the shutdown of an underperforming outlet. Furthermore, Phase 1 of the Salim Group Indonesia JV (establishment of a USD10m food processing plant), initially slated for CY2Q26 start, has hit implementation delays and remains under timeline review by JV partners.
📌 Outlook. Near-term margin recovery could remain constrained by persistent ASP weakness, organic volume drops, and volatile feed raw material costs (corn and soybean meal), though internal supply integration from CAB Feed (formerly Cargill) provides some cost mitigation. Furthermore, Phase 1 of the Salim Group Indonesia JV (USD10m food processing plant) has hit implementation delays and is under review, hence leaving the RM105m Terengganu project (+2.0m bird capacity) as CAB’s primary long-term capacity driver. Management remains cautiously optimistic on its overall business prospects.
📌 Forecast. In view of the persistent weakness in ASPs, alongside with the implementation delay of Salim Phase 1 JV in Indonesia, we cut our FY26f-28f core PAT forecasts by 16.4%/15.7%/15.0%, from RM114.2m/RM120.4m/RM122.7m to RM95.4m/RM101.6m/RM104.3m.
📌 Maintained BUY with a lower TP of RM0.72. We reiterate our BUY recommendation for CAB with a lower TP of RM0.72, implying a potential upside of 34.6% from the current share price of RM0.535. This valuation is based on a 5.0x P/E ratio, pegged to FY27F EPS of 14.47 sen. We pegged a lower P/E ratio of 5.0x, as compared to 5.5x previously, to reflect CAB’s persistent weakness in ASP and also the implementation delay of Salim Phase 1 JV.
📌 Downside risks. Risks to our recommendation include (i) continued slowdown in CAB-Salim Group JV timeline, (ii) persistent higher ASP and lower sales volume, and (iii) disease outbreaks risk.
Research Team, M+ Global
27 Aug 2026
