CAB Cakaran’s Oiltek Feed Pact: Buy Call Held at RM0.72

CAB Cakaran Corporation Berhad (CAB) has signed a non-binding memorandum of understanding with Oiltek Global Pte Ltd, a wholly-owned subsidiary of SGX-ST Mainboard-listed Oiltek International Limited, to study a joint venture in Malaysia. The JV would turn palm oil-derived products into premium animal feed ingredients. According to Malacca Securities Research, the deal extends CAB’s push upstream after its acquisition of CAB Feed Sdn Bhd.

What CAB Cakaran Does and Why Oiltek Matters

CAB brings 50 years of poultry farming experience to the table, while Oiltek contributes a 45-year track record in palm oil processing technology. Oiltek’s know-how is backed by eight proprietary process technology patents. The research house noted that CAB can use this expertise without building the technology in-house.

CAB also has a ready customer base through CAB Feed, formerly Cargill Feed, acquired on 28 November 2025. CAB Feed operates four feed mills in Westport, Butterworth, Melaka and Sabah. The research house said premium ingredients could also be sold to third-party feed millers beyond the group.

The Financial Numbers Behind the Call

Malacca Securities Research has kept its core profit after tax forecasts at RM95.4 million for FY26f, RM101.6 million for FY27f and RM104.3 million for FY28f. The forecasts are unchanged because the MOU does not yet disclose the JV’s investment cost, equity structure or funding. The research house said it expects management to clarify these items as talks progress.

The research house argues that locally sourced palm-derived ingredients could partly reduce CAB’s reliance on imported corn and soybean meal. Those imports are exposed to US dollar movements and geopolitical-driven price swings. No revenue, capex or timeline figures for the JV were disclosed in the announcement.

How Malacca Securities Gets to RM0.72

Malacca Securities bases its target price of RM0.72 on a 5.0x price-to-earnings multiple applied to FY27f earnings per share of 14.47 sen. The target implies 22.0% upside from RM0.59. The research house has not changed the target or the Buy rating following the MOU.

The Risks Malacca Securities Flags

The research house stressed that the MOU is non-binding and remains at an early stage. Product scope, capex and the JV structure are all still undefined. It also cited the earlier delay in the Salim JV Phase 1 as a reason to wait for a definitive agreement before assigning any value to the new venture.

Approvals are still required before the collaboration can proceed. Malacca Securities Research said it would reassess once the JV investment cost and funding are disclosed. Until then, the earnings forecasts carry no contribution from the venture.

What This Means for Retail Investors

For retail investors, the report separates two stories. The CAB Feed acquisition and its four mills are operating assets already in place, while the Oiltek venture is a plan without disclosed numbers. Malacca Securities’ Buy call and RM0.72 target are its own assessment, and the research house itself says it wants more detail before giving the JV any value.

Investors weighing the stock should read the full report, which is available from M+ Online at M+ Online research report 1474. Any decision should factor in the research house’s stated caution and the absence of JV funding details. This article reports the research house’s views and is not investment advice.

Key Takeaways

• Malacca Securities maintains a Buy on CAB with an unchanged target price of RM0.72, implying 22.0% upside from RM0.59.
• The MOU with Oiltek Global is non-binding, with no investment cost, equity structure or timeline disclosed.
• Core PAT forecasts remain at RM95.4 million, RM101.6 million and RM104.3 million for FY26f to FY28f.
• CAB Feed, acquired on 28 November 2025, provides a ready market through four feed mills.
• The research house will wait for a definitive agreement before ascribing any value to the JV.

Frequently Asked Questions

What is Malacca Securities’ target price for CAB Cakaran?

Malacca Securities maintains a Buy call on CAB with an unchanged target price of RM0.72. The target is based on a 5.0x P/E applied to FY27f EPS of 14.47 sen, implying 22.0% upside from RM0.59.

Has CAB Cakaran signed a binding joint venture with Oiltek?

No, according to Malacca Securities Research, CAB has only signed a non-binding MOU with Oiltek Global. The research house said product scope, capex and JV structure remain undefined, and definitive agreements and approvals are still required.

How much profit does Malacca Securities forecast for CAB?

The research house forecasts core PAT of RM95.4 million for FY26f, RM101.6 million for FY27f and RM104.3 million for FY28f. These numbers were kept unchanged because the Oiltek JV’s financial impact has not been disclosed.

Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Ratings and target prices cited are those of Malacca Securities Research and are subject to change. Always do your own research before making investment decisions.

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