JPFA

Contact our analyst Eka

Expansion mode on, 17% upside.
18th July 2018
Price Rp 1870
Target price Rp2190

Site visits

• We just visited several JPFA sites in Central Java. First stop was a slaughterhouse in Pabelan Semarang, Central Java, which has a capacity of 16.8 million birds / year, Blast Freezer capacity of 15,300 tons / year, and cold storage of 300 tons. They produce whole chicken, cut up, parting, boneless, and other by-products. They supply to Central Java and Yogyakarta. Going forward, the plan is to upgrade the process from manual to automatic for greater power efficiency.


• Second site was a Feedmill in Sragen, Central Java, JFPA has 2 feedmills located in Sragen and Grobogan. As of 1Q2018, the Sragen Feedmill has a total capacity of 26,000 tons / month and Grobogan feed mill 18,000 tons / month. Going forward, JPFA will expand Sragen feed mill with a 4th line, build a 6th bulk warehouse with total area 46 x 90 m2. While in Grobogan, JPFA will expand their land to support a warehouse area.


• Third site was Ciomas Commercial Farm in Sumogawe, Central Java. Total capacity for Central Java Region is 4.12 million birds / month, including 3.67 million in bird as contract grower and 504,000 in own farm. Ciomas Commercial Farm has a total capacity of 450,500 birds / month contract grower and 110,000 birds / month own farm. As of May 2018, Central Java has farmed 8.23 million birds and is targeting to reach 19.8 million birds in 2018, growth of 34% from 2017’s 14.8 million birds.

Valuation: TP 2,190, 17% Upside

• As DOC and live bird prices increased in June 2018 which contribute to the commercial farm and consumer product segments, we revise our revenue estimate to IDR 34.6 trillion or growth of 16.89% YoY.
• Using DCF valuation with WACC at 5.70% We are targeting JPFA to trade at 14x 2019F PE within a year. Target Price is IDR 2,190 which represents 17% upside. HOLD

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