JPFA
Contact our analyst Eka
Buy, 20% upside.
5th August 2020
Price Rp 1,020
Target price Rp 1,230
5th August 2020
Price Rp 1,020
Target price Rp 1,230
A Weak result
- JPFA 2Q2020 performance weakened due to the Covid-19 outbreak. JPFA revenue was down -7.3% YoY to IDR 16.9 trillion in the 1H2020 due to lower poultry, feed and DOC sales volumes, in line with lower consumer spending.
- JPFA gross profit dropped -16.4% yoy to IDR 2.77 trillion in line with a lower gross profit margin of 16.4% from 18.2% in 1H2019.
- Operating profit declined -58% yoy to IDR 623 billion, while the operating profit margin dropped to 3.7% from 8.1% in 1H2019.
- Net income also dropped -81.3% yoy to IDR 155 billion from IDR829 billion in the 1H2019.
- As a result of the weak 1H2020 result, we have revised down JPFA revenue and profit forecasts for 2020F to IDR 35.7 trillion and IDR 644 billion or lower by -3% and -64% respectively.
Trade what you want (exciting shares like JPFA) when you want & wherever you are. Simply sign up for our Binaartha Online Trading
⬇️ here.⬇️
⬇️ here.⬇️
Dragged down by Broiler and DOC
- Day Old Chick (DOC) prices and broiler prices fell to their lowest levels in April and then rebounded gradually in May and June. The prices dropped due to a market oversupply in anticipation of Ramadan and a lower demand impact from Covid-19.
- The rebound in broiler and DOC price could not cover the deep plunge in April, resulting in operating losses for both segments in 1H2020.
- JPFA DOC revenue declined by -28.7% yoy to IDR 1.17 trillion due to a lower DOC ASP while sales volume fell -9.2% YoY in 1H2020.
- The decline in Broiler and DOC segments was offset by a stable feed segment despite a slight decreased (-6.4% yoy) in feed sales volume.
- Despite the broiler and DOC price rebound in the last two month, we are very conservative on broiler and DOC prices in 2H2020 due to continued oversupply.
- However, we are expecting 2H2020 demand will gradually recovery in line with a recovery of Indonesia private consumption as the economy re-opens.
- Using a DCF valuation with WACC of 7.783%, we are targeting JPFA to trade at 14x 2021F PE within a year. Target Price is IDR 1,230 which represents 20% upside. We maintain our recommendation to Buy.
Previously
