CPIN Apr2022

CPIN

Contact our analyst Eka

HOLD, 15% upside
27th April 2022
Price Rp 5,025
Target price Rp 5,765

Sales Higher QoQ

CPIN maintained double digit sales growth of +16.3% YoY or +16.3% QoQ to IDR 14.1 trillion in the 4Q2021. Sales growth was boosted by broilers which recorded +34.8% YoY growth to IDR 7.87 trillion. Processed chicken also recorded +27% growth to IDR 1.85 trillion. Feed and DOC sales decreased -5.1% YoY and -33.3% YoY respectively in 4Q2021.
In term of EBIT margin, Broiler margins were still negative at -1.5% from 13.4% in 4Q2020, but that’s better compared to 3Q2021’s -28%. Feed and processed chicken EBIT margins also fell to 22% and 6.4% due to higher raw material price in 4Q2021 while DOC margins increased to 70% from 18% in 4Q2020.
For 2021FY, CPIN recorded sales of IDR 51.69 trillion which is double digit growth of +21.6% YoY with Broiler and processed chicken positive growth of 9.9% and 11% respectively.
Broiler prices decreased from July – November but gradually increased in December in line with a recovery in demand. For 2022F, we are targeting 9.8% YoY sales growth to IDR 56.7 trillion.

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4Q2021: Bottom-line recovery

After a loss in 3Q2021, CPIN recorded a net profit in 4Q2021 of IDR 941 billion, with a NPM at 6.7%, lower compared to 4Q2020’s 13.1%.
For 2021FY, CPIN recorded a net profit of IDR 3.62 trillion, which is a decrease of -6% YoY as the net profit margin decreased to 7.0% from 9.0% in 2020.
Cost of sales increased +29.7% YoY or +4.3% QoQ to IDR 11.9 trillion in 4Q2021 because of higher raw material prices (Soy Bean Meal, Corn). Gross profit decreased -26% YoY but was higher by +216% QoQ to IDR 2.17 trillion with a lower gross profit margin of 15.4% from 24% in 4Q2020.
CPIN recorded an operating profit of IDR 1.45 trillion after an operating loss in 3Q2021 of IDR -246 billion.
As commodity prices (SBM and Corn) continue to increases, we expect margins to contract in 2022F, However, for the bottom line, we still expect CPIN’s profit will reach IDR 3.85 trillion which is 6% growth.

Valuation: TP 5,765, 15% upside

We downgrade or recommendation to Hold because of margin contraction due to higher commodities prices.
We are targeting CPIN to trade at a 26x 2022F PE within a year. Target Price is IDR 5,765 which represents 15% upside. We recommend Hold.

Previously

CPIN Nov2021