CPIN Jun2022

CPIN

Contact our analyst Eka

Buy, 20% upside
22nd June 2022
Price Rp 5325
Target price Rp 6380

Double Digit growth

CPIN maintained double digit sales growth of +15.2% YoY or +1.3% QoQ to IDR 14.29 trillion in the 1Q2022. Broiler and processed chicken had higher growth of +31.3% YoY and +31.4% YoY to IDR 7.99 trillion and IDR 2.02 trillion respectively. feed and DOC sales decreased -2.6% YoY and -25.6% YoY respectively.
In term of EBIT margin, Broiler margins were still negative at -0.04% but improved from 3Q2021’s -28%. Feed margins improved from 22% in 4Q2021 to 27.8% in 1Q2022. Processed chicken EBIT margins also improved to 12.4% from 6.4% in a recovery after higher raw material price in 4Q2021. DOC margins decreased to 63.5% from 69.9% in 4Q2021.
Higher broiler prices shows demand is recovering, so for 2022F, we are targeting 9.3% YoY sales growth to IDR 56.5 trillion.

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1Q2022: Quarterly improvement

CPIN’s bottom line improved after a loss in 3Q2021. CPIN booked net profit of IDR 1.19 trillion which is +26.4% QoQ but still decreased -18.3% YoY. NPM also improved from 6.7% in 4Q2021 to 8.3% in 1Q2022.
From higher raw material costs due to higher commodities prices (SBM and corn), cost of sales increased +21% YoY to IDR 11.9 trillion in 1Q2022. Gross profit decreased -8.4% YoY but was higher by +9.8% QoQ to IDR 2.38 trillion with a higher gross profit margin of 16.7 % from 15.4% in 4Q2021.
CPIN recorded an operating profit of IDR 1.54 trillion, down -18.8% YoY but higher +5.8% QoQ.
As margins improved in 1Q2022 despite higher commodities prices, we revise up our target for CPIN’s bottom line. We expect CPIN’s profit will reach IDR 4.14 trillion which is 14% growth.

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Valuation: TP 6,380, 20% upside

We upgrade our recommendation to BUY as the 1Q2022 performance shows an improvement after the loss in 3Q2021.
We are targeting CPIN to trade at a 27x 2022F PE within a year. Target Price is IDR 6,380 which represents 20% upside. We recommend BUY.

Previously

CPIN Apr2022