KUALA LUMPUR: CAB Cakaran Corporation Bhd will invest US$70million to US$80 million with Indonesia's biggest conglomerate and its second-largest shareholder Salim Group to build 50-60 poultry farms in the republic in the next five years.
Group managing director Christopher Hoon Phong Chua said the deal was to supply four million birds per month to cater to the Indonesian market.
"We have engaged with Salim Group previously, but we had to put hold the plans due to the Covid-19 pandemic and the closure of international borders. We have now re-established the negotiations with Salim Group on our plans," Hoon said at the launch of its Farm's Best Omega 3 chicken product here today.
He said the pilot project with Salim Group, which holds a 15.3 per cent stake in CAB Cakaran, for the new chicken breeding farms would start in Java, Indonesia, but declined to elaborate on when the project would start construction.
On the export market, Hoon said CAB Cakaran was targeting to export its Best Omega 3 Chicken product to Singapore.
"We already have our Singapore factory, office and marketing team to market and distribute our premium chicken product in the country. Currently, we are still negotiating with several supermarkets in Singapore to market our Omega 3 Chicken product," Hoon said.
CAB Cakaran aims to capitalise on the new product, which offers a higher margin, to build a stronger market presence in Malaysia and grow its export markets.
The value-added food product is branded under Farm's Best Food Industries Sdn Bhd, a 53.04 per cent-owned subsidiary of CAB Cakaran.
"This product will help to address the needs of health-conscious consumers as the effects of the Covid-19 pandemic have prompted consumers to become increasingly more conscious of their health and choose healthy food products that fuel their bodies," said Hoon.
CAB Cakaran attributed the success of its value-added food product to the synergy derived from the acquisition of Farm's Best Food in 2016.
The company acquired a controlling stake in the poultry processing arm of Farm's Best Bhd for RM5.2 million in cash.
Hoon said expanding the downstream product targeting the premium segment would help the company cushion its margin fluctuations and boost financial performance.
Farm Best's range of chicken products is also exported to Japan, Hong Kong and the Philippines.
CAB Cakaran has an exclusive tie-up with Village Grocer to market and sell the Omega 3 Chicken nationwide, which, Hoon said, would roughly take about six months to see the sales performance rate.
The company will then formulate a sales plan to market the Omega 3 Chicken product to other supermarkets and retailers, including the hotel, restaurant and cafe (HORECA) sector.
He also said the premium chicken product would not affect the company's broiler chicken product segment as both products were of different segments.
Hoon also noted that the broiler chicken sales and revenue would not be affected by the launch of premium chicken products this year as the company foresees strong sales growth and a higher average selling price (ASP) to continue the momentum for the broiler products.
The ASP for broiler chicken products was RM5.62 per kg in the fourth quarter (Q4) ended Sept 30 2022, compared to RM4.79 per kg in Q4 2021.
Compared to the normal chicken, CAB Cakaran's range of premium chicken products hold about five per cent domestic market share.
Hoon expects the domestic market share to reach 10 per cent for premium chicken products in the next five to eight years once consumers are more aware of the product's health benefits.
