CAB Cakaran ready to roll in Indonesia

WITH its long-awaited expansion into Indonesia and increasingly visible integration plans, mid-sized poultry company CAB Cakaran Corp Bhd is gaining more attention.

Significant developments unfolded for CAB Cakaran last year.

In July, the company completed its acquisition of Cargill Feed Sdn Bhd, finalising its integration plans.

This was followed by the conclusion of its partnership with Indonesian conglomerate Salim Group, marking CAB Cakaran’s entry into a market with immense potential, driven by a large population and low per capita poultry consumption.

It is no surprise that two research houses have put target prices 50% above what the stock trades at now.

CAB Cakaran group managing director Christopher Chuah Hoon Phong explains that after eight long years of waiting, the group is ready to launch the venture and reap its benefits.

Salim Group will hold a 70% stake and CAB Cakaran the rest.

The eight-year delay was because of the change of government in Indonesia and the Covid pandemic.

“If Salim Group had not approached us to be their partner, we would not have gone on our own,” Chuah says. This is because it would have been too risky.

Salim Group operates vast businesses in Indonesia, including food and consumer goods (PT Indofood Sukses Makmur Tb – the world’s largest producer of instant noodles), retail (Indomaret – the largest minimarket chain in Indonesia with over 22,000 outlets), as well as a digital bank.

The poultry industry was something new and the group saw a huge opportunity there, particularly as the price of other meats like beef and fish began to increase in 2025.

Indonesia’s huge population of more than 287 million means chicken consumption per capita of only 8.4kg compared to Malaysia’s 50.5kg per year.

“Salim Group’s projected capacity over the next three to five years is to produce 4.5 million birds per month, five million day-old chicks per month, and three million eggs per day.

“For perspective, CAB Cakaran in Malaysia produces 6.5 million birds per month and nine million day-old chicks per month,” Chuah explains.

He adds that while CAB Cakaran took 30 years to build its foundation, Salim Group aims to achieve similar results in just three to five years.

This is likely to succeed due to its strong financial backing, scalability and the sheer size of the group.

The entire project, outlined in a five-year plan, involves joint investments of up to US$80mil.

When asked why Salim Group chose CAB Cakaran, Chuah is hesitant to comment, instead emphasising their focus on meeting projected targets with minimal setbacks.

“We will start with food processing. Phase 1 will involve an investment of US$10mil just to set up the plant. After that, the entire integrated broiler production facility will need to be built,” Chuah says.

Operations are set to begin by the second quarter of this year.

Chuah expects the usual business challenges like biological risks, cost pressures, regulatory demands and supply chain complexities.

The 100% equity interest in Cargill Feed Sdn Bhd for RM231mil will result in CAB Cakaran owning all four of Cargill Feed’s mills (Malacca, Butterworth, Westport and Kota Kinabalu). Chuah claims it was the missing piece in its “farm to fork” operating model.

CAB Cakaran was once a customer of Cargill Feed. It is worth noting that poultry companies have always faced margin squeeze due to volatile feed costs.

TA Securities notes: “Following the acquisition of Cargill Feed, CAB Cakaran will internalise its feed production and gradually, reduce dependence on external suppliers. This strategy is expected to enhance profitability through direct management of raw materials.”

TA Securities projects Cargill Feed’s revenue to reach RM600mil and contribute RM21mil in net profit by financial year 2027 (FY27).

The research firm also sees potential in CAB Cakaran’s retail segment which consists of the supermarket business through Pasaraya Jaya Gading Sdn Bhd and Home Mart Fresh & Frozen Sdn Bhd.

Chuah says the group intends to open 100 to 150 more supermarkets within the next five to 10 years.

“We will accelerate the growth of our food business by vastly expanding our processed food production capacity and building a big retail network,” he says.

TA Securities has a target price of 89 sen for CAB Cakaran, on the basis of ascribing the stock a price earnings (PE) multiple of five times its forecast earnings per share for FY26.

“This represents a 23% discount to the peer average PE multiple of 6.5 times. We believe the discount is justified given CAB Cakaran’s smaller market capitalisation and its still moderate net margin profile,” the research house says.

While 2025 was filled with significant agreements for CAB Cakaran, 2026 will be defined by the execution of its Indonesian venture.

Chuah says CAB Cakaran will seek more merger and acquisition opportunities, confirming that long-term growth is the priority.