Newsbreak

• CAB Cakaran Corporation Berhad (CAB) announced that it has signed a non-binding Memorandum of Understanding (MOU) with Oiltek Global Pte Ltd (Oiltek), a wholly-owned subsidiary of SGX-ST Mainboard-listed Oiltek International Limited, to explore a joint venture (JV) in Malaysia to develop premium animal feed ingredients from palm oil-derived products. Both parties will evaluate the feasibility of the collaboration, including product development, processing technologies and the JV framework. The MOU remains subject to definitive agreements and the necessary approvals, with no investment cost, equity structure or timeline disclosed.
• The collaboration pairs CAB's 50 years of poultry farming experience with Oiltek's 45-year track record in palm oil processing technology, backed by eight proprietary process technology patents. The JV aims to convert palm-derived products into feed ingredients with improved nutritional quality, digestibility and commercial value. CAB brings a ready market via CAB Feed Sdn Bhd (formerly Cargill Feed), acquired on 28 November 2025, which operates four feed mills in Westport, Butterworth, Melaka and Sabah.

M+ Global View

• We view the MOU as a logical next step in CAB’s move upstream following the CAB Feed acquisition, extending the Group from feed milling into feed ingredients. Locally sourced palm-derived ingredients could partially reduce CAB's reliance on imported corn and soybean meal, which remain exposed to USD and geopolitical-driven price volatility.
• Partnering with Oiltek allows CAB to tap proven processing know-how without developing the technology in-house, while premium feed ingredients could also be sold to third-party feed millers. Nonetheless, we remain cautious as the MOU is non-binding and at an early stage, with product scope, capex and JV structure yet to be defined. Given the Salim JV Phase 1 delay, we would await a definitive agreement before ascribing any value.

Valuation & Recommendation

• Forecast. Pending further clarification from management on the JV investment cost, equity structure and funding as the MOU progresses, we maintain our FY26f-28f core PAT forecasts of RM95.4m/RM101.6m/RM104.3m.
• Valuations.  We maintain our Buy recommendation for CAB with an unchanged TP of RM0.72, implying a potential upside of 22.0% from the current share price of RM0.59. The target price is derived based on a P/E ratio of 5.0x pegged to FY27f EPS of 14.47 sen.