CPIN
Contact our analyst Eka
Buy, 24% upside
12 August 2022
Price Rp 5650
Target price Rp 6990
12 August 2022
Price Rp 5650
Target price Rp 6990
Double Digit growth
- Despite lower demand as the higher commodity prices forced an increase in the ASP, CPIN maintained double digit sales growth of +12.4% YoY to IDR 28.6 trillion in the 1H2022. For 2Q2022, CPIN also maintained positive sales growth of +9.8% YoY or +0.3% QoQ.
- Broiler had the fastest growth of +22.7% YoY to IDR 8.3 trillion in 2Q2022. followed by processed chicken with +14.3% growth YoY to IDR 2.1 trillion. Feed and DOC sales decreased -7.4% YoY and -48.5% YoY respectively due to a drop in DOC prices.
- In terms of EBIT margin, Feed margins continued to improve from 22% in 4Q2021 to 29.2% in 2Q2022. Broiler margins become positive at 4.7% from negative at -0.04% in 1Q2022. Processed chicken EBIT margins decreased to 8.9% from 12.4% in 1Q2022. DOC margins also decreased to 14.7% because of a lower DOC price in 2Q2022.
- In line with higher ASPs, we are targeting 9% YoY sales growth this year to IDR 56.5 trillion.
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2Q2022: Quarterly improvement continues
Valuation: TP 6,990, 24% upside
- CPIN’s bottom line profit continued to improve in 2Q2022, with +3.2% YoY growth but was still lower compared to last year -11% YoY to IDR 1.22 trillion. NPM also improved from 8.3% in 1Q2022 to 8.6% in 2Q2022.
- For 1H2022, CPIN booked net profit of IDR 2.4 trillion, a decrease of -14.7% YoY with a lower NPM at 8.4%.
- The cost of sales also increased +14% YoY but decreased slightly -0.6% QoQ due to higher raw material costs from higher commodity prices. This resulted in a decrease in gross profit by -6.3% YoY but it was higher by +4.9% QoQ to IDR 2.5 trillion. GPM improved quarterly from 16.7% in 1Q2022 to 17.5% in 2Q2022.
- CPIN recorded an operating profit of IDR 1.64 trillion, down -10.8% YoY but higher +5.5% QoQ.
- As margins have improved in 2Q2022, we expect CPIN’s profit will reach IDR 4.14 trillion this year which is 14% growth.
Valuation: TP 6,990, 24% upside
- We are targeting CPIN to trade at a 27x 2022F PE within a year. Target Price is IDR 6,990 which represents 24% upside. We recommend BUY.
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