KUALA LUMPUR: Sarawak integrated poultry company CCK Consolidated Holdings Bhd 's (CCK) earnings for the financial year 2024 (FY24) is expected to normalise on lower government subsidies, said Public Investment Bank Bhd (PublicInvest).
In November 2023, government's subsidies for chicken were discontinued. Subsidies to control the price of eggs however is still in place.
PublicInvest said CCK's core net profit for the full-year of 2023 of RM83.1 million was above estimates, accounting for 114 per cent of the firm's forecast.
It said the difference in its forecast was mainly due to higher-than-expected amount collected from the subsidy scheme.
"Although earnings were above estimates, we are not adjusting our forecast as we are not expecting significant bump in earnings given the removal of chicken subsidy on November 1, 2023."
Despite challenging macroeconomic headwinds however, PublicInvest is still optimistic on CCK's outlook, underpinned by the resilient demand for poultry and consumer staple products. "This should bode well for CCK's retail segment."We believe that the potential easing in feed raw material costs (corn and soybean) should help to mitigate the negative impact from the appreciation in US dollar," it said.
HLIB research maintained its Outperform call on CCK, with an unchanged target price of RM1.10.