KUALA LUMPUR (Feb 26): CCK Consolidated Holdings Bhd (KL:CCK) slid to its lowest in nine months on Wednesday after its fourth quarter and year-end results missed expectations.

In early morning trade, shares of the poultry farm operator fell 15 sen or more than 10% to RM1.25. At the time of writing, CCK was trading at RM1.28, valuing it at RM795 million.

CCK's net profit for the fourth quarter ended Dec 31, 2024 (4QFY2024) tumbled 68.4% year-on-year (y-o-y) to RM10 million, weighed by the absence of government subsidies and a one-off RM10 million withholding tax related to its Indonesian operations.

Adjusted for exceptional items, its core net profit (CNP) stood at RM20.3 million in 4QFY2024, bringing full-year CNP to RM84.5 million, which came within 97.2% of consensus expectations.

Revenue for the quarter rose 4.6% y-o-y to RM267.4 million, supported by a resilient retail segment, which increased by 5.8%, and poultry sales, which rose by 7.6%. However, prawn and food service segments continued to underperform, declining by 6.7% and 7.6% respectively.

PublicInvest Research, in a note on Wednesday, cut its FY2025-2026 forecasts by an average of 9% due to reduced contributions from CCK’s Indonesian subsidiary after the sale of a 40% stake to Creador.

Analysts at Apex Securities made smaller adjustments, trimming FY2025 earnings by 1.2% but raising FY2026 projections by 3.1%, citing potential cost savings and expansion benefits.

Despite the earnings miss, analysts remain bullish on CCK’s long-term growth. The group is set to triple its food processing capacity in Indonesia and expand its retail footprint in key cities like Medan and Surabaya.

PublicInvest reaffirmed that the impact of increased minimum wages are minimal, as CCK could pass on costs should the need arise.

“Moreover, the wage adjustment should act as a positive catalyst for consumer spending, likely benefiting CCK’s retail operations,” the research house added.

PublicInvest has maintained its “outperform” rating but lowered its target price to RM1.55, while Apex Securities upgraded CCK to “buy” with a slightly lower target price of RM1.79.

Meanwhile, Apex cited CCK faces several risks that could impact its earnings and expansion plans.

“Volatility in poultry prices and feed expenses, along with vulnerability to currency fluctuations due to feed costs being denominated in USD, while the company also exports a portion of its goods overseas,” Apex pointed out.