CAB Cakaran Corporation Bhd (CAB) is set to expand its upstream poultry farming operations in the East Coast with a RM105 million modern poultry farming project in Terengganu, according to CGS.
The group’s indirect wholly-owned subsidiary, CAB Cakaran (Timur) Sdn Bhd (CABT), has entered into three 21-year lease agreements with the Terengganu state government for 414.63 hectares (about 1,024.5 acres) of agricultural land.
CGS said the project will be developed in two phases and eventually comprise 100 closed-house chicken coops with a total rearing capacity of two million chickens.
Phase one will involve the development of 50 coops with capacity for one million chickens over two years, at an estimated investment of RM52.5 million.
A further 50 coops, also with one million birds of capacity, will be developed under phase two at another RM52.5 million. Phase two development is expected to begin after completion of the first phase and will take another two years.
The total annual lease charges are nominal at RM62,200, with the first two years’ rental of RM124,400 to be paid upfront. Development work is required to commence within three months.
Building Upstream Capacity
CGS described the long-term land lease as a capital-efficient expansion that gives CAB access to a substantial land footprint at a relatively low annual rental cost.
The project would also enable CABT, which has historically operated mainly through trading and contract farmers, to establish its own upstream farming capacity in the East Coast.
This could support CAB’s regional distribution and supermarket networks, including Pasaraya Jaya Gading, while providing greater control over poultry production capacity.
Upon full completion, the project is expected to add two million birds in rearing capacity, providing a longer-term volume growth opportunity for CAB’s Integrated Poultry division.
Closed-House System And Solar Support
CGS said the project will use modern closed-house systems across all coops, allowing better climate control, potentially reducing mortality rates and strengthening protection against biosecurity and disease risks.
The facilities will also incorporate solar energy support systems to power farm operations.
The solar component is expected to complement CAB’s environmental, social and governance (ESG) practices while helping mitigate exposure to fluctuations in long-term grid electricity costs.
CGS said leasing the land directly from the state government also allows CAB to preserve its initial capital for investment in farm infrastructure and automation.
Earnings Contribution From FY29
The research house said its earnings forecasts remain unchanged as the project is only expected to contribute meaningfully to earnings from FY2029.
The funding structure for the RM105 million investment has not been disclosed, and CGS has therefore not incorporated potential financing and depreciation costs into its forecasts pending further clarity.
The project is also not expected to have a material impact on CAB’s FY2026 earnings or share capital.
CGS maintained its “Buy” recommendation on CAB with an unchanged target price of RM0.89, based on a price-to-earnings ratio of 5.5 times its FY2026 forecast earnings per share of 16.23 sen.
