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CAB’s Indonesian venture to start

CAB’s Indonesian venture to start

CAB Cakaran Corp Bhd
expects its joint-venture integrated poultry farming project in Indonesia with
KMP Private Ltd, a business unit of Salim Group, to kick off in the first half
of next year. This will mark CAB’s first foray into the Indonesian market as
well as the layer business.

Group managing director
Chris Chuah told StarBiz that the group was now finalising the details and cost
of the project.

While the construction of
the entire farm will take up to five years, it is hoped that by the second year
of construction, the Indonesian operations will have the capacity to produce
some four million broilers per month and three million eggs per day.

“The construction work on
the project will start by the first half of next year in Java, and should take
three to five years to complete,” said Chuah.

On Dec 7, 2015, CAB had
signed a joint-venture agreement with Salim’s special purpose vehicle (SPV)
company in Indonesia for the purpose of establishing a fully integrated poultry
business in Indonesia.

Under the agreement, the
SPV would set up and hold a 90% stake in the new joint-venture company and CAB
Cakaran to hold the balance 10%. However, CAB Cakaran will have the option to
increase its shareholding up to 30% in the next three years after the initial
set-up, depending on its financial condition.

At about the same time,
the Salim Group also bought a 9.1% stake or 15.06 million shares in CAB Cakaran
through a private placement at RM2.07 apiece. To date, the Salim Group, via its
entity Plant Wealth Holdings Ltd, holds a 17.12% stake in CAB Cakaran.

The Chuah family remains
as the largest shareholder of CAB Cakaran with a cumulative 47.46% stake in the

Chuah said the project
was in line with the forecast that Asia would be the driver of increasing
global poultry consumption in future.

“According to an Orissa
International report, global poultry consumption is predicted to grow by 27% to
28 million tonnes by 2023 – with 40% of that growth in Asia.

“In South-East Asia, the
growth of incomes, population, urbanisation has translated into a growth of
demand for animal products.

“The surge in demand for
animal protein resulted in a significant increase of meat – mainly poultry and

“Poultry is the largest
livestock sector in Malaysia, Thailand, and Indonesia,” Chuah said.

Malaysia’s poultry meat
per capita consumption is among the highest in the world, Chuah said.

He added that Malaysians
consumed 1.8 million chickens and 2.8 million chicken eggs daily. “Indonesian
poultry production € is estimated at 10bil (RM49bil) in 2015 with broiler meat
accounting for three-quarters of the total.

“The poultry meat sector
is projected to grow 70%-90% by 2020 if GDP increases by 6% per annum.

“The layer industry is
also projected to grow at 50%-60% of the broiler sector,” he said.

According to Chuah, the
group expects export sales to generate 25% of the group’s revenue for the 2018
fiscal year ending Sept 30, compared to 20% in 2017.

“The group’s processed
food are sold to markets in Myanmar, Maldive, Singapore, and Brunei, while the
live birds are exported to Singapore,” he added.

For its 2017 financial
year ended Sept 30, Chuah said the group was confident of achieving a strong
double-digit percentage growth over 2016.

“This is because for the
nine months of the 2017 financial year, we have already achieved a revenue of
RM1.08bil compared to the RM1.1bil achieved for the whole of 2016.

“Our net profit for the
nine months of 2017 is already RM31mil compared to RM25.9mil in 2016,” he said.

He expects sales for its
first quarter ended Dec 31, 2016 to improve by about 10% compared to the
previous corresponding period.

On the first quarter for
2018 financial year ending Dec 31, Chuah said the group expected improvement in
sales over the previous corresponding period.

“Since last year, due to
the uncertainties in the economy, many Malaysians have chosen to stay back home
or travel within the country, which has increased the demand for broiler meat,”
he said. 

Source: The Star

Posted on : 06 November 2017