JPFA
Contact our analyst Eka
Buy, 28% upside.
8th March 2023
Price Rp 1255
Target price Rp 1600
8th March 2023
Price Rp 1255
Target price Rp 1600
Better sales QoQ
- JPFA booked higher sales in 4Q2022 of IDR 12.17 trillion or +16.7% QoQ and +0.9 YoY. Poultry processing and consumer products growth was the fastest while the commercial farm segment still contributes the most to JPFA’s sales. For 2022FY, JPFA sales increased +9.1% YoY to IDR 48.97 trillion due to higher sales volumes and a higher ASP specifically in feed.
- Feed sales increased +2.6% YoY to IDR 3.54 trillion with the higher ASP. For 2022, feed sales recorded +6% growth YoY to IDR 13.98 trillion inline with higher sales volume, +6% YoY and that higher ASP. The feed OPM was up to 8.2% from 7.2% in 2021.
- Commercial farm sales decreased -3.1% YoY because of lower livebird prices in October 2022, with the livebird price falling to IDR 16,258 or -14% YoY. But sales grew slightly +1.7% QoQ in 4Q2022 as livebird prices in November and December increased again but didn’t make up the drop in October. DOC sales increased +3.7% YoY but declined -14% QoQ to IDR 641 billion.
- The DOC price in January and February recorded its lowest since May 2020, while livebird prices increased +6.7% from the October low. We are expecting a rebound in prices in March into the 2Q2023 as the month of fasting and Eid holidays usually increase demand.
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4Q2022: Lower Margin
Valuation: Upgrade to BUY with TP 1,600
- JPFA booked a negative net profit margin of -0.1% in 4Q2022 on lower livebird and DOC prices. JPFA booked a net loss of IDR 8 billion from a profit of IDR 515 billion in 4Q2021.
- For 2022, JPFA still had a lower NPM of 2.9% compared to 2021’s 4.5%.
- In 4Q2022, Gross profit also decreased by -26% YoY or -12% QoQ to IDR 1.54 trillion due to higher costs of sales, up +6% QoQ. This resulted in a lower gross profit margin of 12.6% from 17.2% in 4Q2021.
- As we expect demand increases in 1Q2023 and 2Q2023 to boost the livebird and DOC prices, while the commodity cost prices (corn and SBM) are lower, we are expecting JPFA top line and bottom line profit for 2023 to reach IDR 56.6 trillion and IDR 1.7 trillion respectively.
Valuation: Upgrade to BUY with TP 1,600
- Using a DCF valuation with WACC of 8.95%, we are targeting JPFA to trade at a 10.7x 2023F PE within a year. Target Price is IDR 1,600 which represents 28% upside. We recommend to BUY.
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