CCK ... Mar10

- CCK Consolidated Holdings’ (CCK) 1HFY10 net profit of RM7.6m was broadly in-line with our expectations , comprising 58% of our FY10 net profit forecast of RM13.3m. 1HFY10 earnings growth came from higher retail prices across the board for most of CCK’s products.

- New store contribution in the retail category drove 1HFY10 revenue up by 9% YoY. The food rations and prawn aquaculture divisions also registered positive sales growth that offset the decrease in sales of poultry products. Pretax profit in 1HFY10 increased by 71% driven by higher average selling prices.

- Exceptional sales in previous 1QFY10 due to Hari Raya seasonality resulted in 2QFY10 revenue dipping by 6% QoQ. All divisions except poultry turned in lower sales QoQ. Pretax profit fell by 18% QoQ du e to higher poultry feedmeal costs and decline in production efficiency from lower sales volumes.

- No interim DPS declared. The company already paid out a special interim DPS of 7.0 sen and a share divided of 1 treasury share for every 30 existing share held, during the quarter.

- FY10 and FY11 earnings estimates unchanged. FY10 will see sales boosted by the opening of 3 new retail outlets in Kota Kinabalu, Kuching, Pontianak and a poultry farm in Kota Kinabalu.

- Maintain BUY recommendation and target price of RM0.76 based on FY09 EPS applied to FY10 EPS of 8.4 sen. A potential rerating catalyst for CCK would be the resumption of seafood exports to the EU.