The retail segment remains to be CCK Consolidated Holdings Bhd’s (CCK) core business, accounting for 79.1 per cent of the total revenue in its financial year 2022 (FY22).
As of the first quarter of FY23, CCK has 70 retail stores and three supermarkets under the CCK Local brands. Furthermore, the group has one wholesale store and seven partner retail stores in Pontianak, Indonesia.
These retail stores in Malaysia and Indonesia collectively serve approximately 20,000 customers daily. The group serves both business-to-business (B2B) and business-to-consumer (B2C) customers in this segment.
As the group provides a wide range of products, including fresh chicken, processed foods, frozen foods, ready-to-eat roasted chicken, fresh vegetables and fruits, as well as seasoning and spices, MIDF Amanah Investment Bank Bhd (MIDF Research) said these products are competitively priced and cater to both urban and rural customers.
“We gather that the group sources all fresh chicken products internally, and 80 per cent of the processed foods under CCK’s brand are produced in its own factory, with the remaining 20 per cent outsourced through OEM.
“Moving forward, the group targets to open two CCK Fresh Mart outlets in FY23. The payback period for opening one retail store of standard size is approximately 6 months.
“Additionally, the group plans to establish one more supermarket with a significantly larger variety of products in East Malaysia within the next two years.
“Meanwhile, management highlighted that all store locations have been carefully chosen to ensure profitability.”
MIDF Research affirmed that CCK remains the largest integrated poultry supplier in Sarawak, with its poultry segment being the second-largest contributor to FY22’s revenue.
The segment focuses on rearing and producing poultry products, with 100 per cent of the production serving retail and institutional customers. The company operates farms, a feed mill, a hatchery, and an abattoir in Sarawak and Sabah.
Moreover, to ensure quality, CCK’s abattoir sources some of its chicken and eggs from local poultry farmers. In particular, CCK provides these farmers with animal feed and nutrition, thereby maintaining a high standard of quality throughout the supply chain.
As for the matter of price ceilings for chicken and eggs, MIDF Research said it was manageable because CCK has implemented effective cost control measures and benefits from a favourable product mix and economies of scale due to its stake in Goldcoin.
Similar to Peninsular Malaysia, price ceilings for chicken and eggs have been imposed in East Malaysia, but it varies across cities in Sabah and Sarawak.
“Government subsidies for chicken and eggs further help offset the impact of price ceilings and the weakening ringgit,” it continued. “The normalisation of forward prices for corn and soybean suggests lower raw material costs in the future, which will further lower input costs.
“This could support CCK’s profit margin and encourage continued chicken and egg production to ensure an adequate supply in the market.”
Historically, chicken and egg prices in Sarawak have been higher than the national average in Malaysia. Although there was a downward trend in prices for chicken and eggs in Sarawak on a monthly basis in May 2023, the average costs remained elevated compared to the previous year and 2021.
Source : The Borneo Post