JPFA
Contact our analyst Eka
Buy, 19% upside.
6 March 2025
Price Rp 2110
Target price Rp 2530
6 March 2025
Price Rp 2110
Target price Rp 2530
Return to Profitability in commercial farming after 3 years of losses
- JPFA’s commercial farming segment recorded a profit in FY 2024, marking a turnaround after three consecutive years of losses. This recovery was driven by stable average selling prices (ASP) of day-old chicks (DOC) and broilers throughout the year.
- JPFA’s total sales increased by 9% YoY, reaching IDR 55.8 trillion in 2024, supported by higher sales volumes and prices for DOC and broilers. Q4 2024 revenue stood at IDR 14.5 trillion, reflecting 8.3% YoY and 6.5% QoQ growth.
- The feed segment’s operating margin declined to 1.3% in Q4 2024, down from 16.7% in Q3 2024, while for FY 2024, it dropped to 7.1%. The margin decline was primarily due to lower ASP, aligning with reduced raw material costs, especially for soybean and corn. Corn prices, a key driver of feed costs, dropped from IDR 7,000 in January to IDR 4,600 in December. Meanwhile, soybean prices remained low throughout 2024 but started rising in January 2025 due to trade tensions.
- The commercial farming segment saw 26.3% YoY growth, reaching IDR 26.9 trillion, with an even sharper increase of 75% YoY or 80% QoQ to IDR 9.83 trillion in Q4 2024. This growth was driven by stable broiler prices, allowing the segment to achieve a positive operating profit margin of 5.9% in 2024 and 9.3% in Q4 2024, marking a turnaround after three years of losses. The segment’s operating profit reached IDR 1.59 trillion, compared to a loss of IDR 811 billion in 2023.
- The poultry processing and consumer products segment posted 9.6% YoY sales growth, reaching IDR 8.7 trillion in 2024, with Q4 2024 sales increasing 14.2% YoY and 4.5% QoQ to IDR 2.32 trillion. The operating profit margin improved to 5.3% in Q4 2024.
- DOC revenue showed triple-digit growth of 232% YoY, reaching IDR 8 trillion in 2024, with Q4 2024 DOC sales surging by 807% YoY or 610% QoQ to IDR 5.6 trillion. The operating profit margin turned positive at 5.4% in Q4 2024, a significant recovery from -5.6% in Q4 2023, supported by higher DOC sales volume and stable ASP.
- Looking ahead, higher demand for live birds and DOC is expected in Q1 2025 due to the Ramadhan period in March, which typically boosts poultry consumption.
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Consistent Quarterly Profitability Throughout 2024
Valuation: Maintain BUY with a Target Price of IDR 2,530
- JPFA maintained positive quarterly net income in 2024, achieving triple-digit YoY growth of 225%, with full-year net profit reaching IDR 3.02 trillion. In Q4 2024, net income reached IDR 926 billion, a strong recovery from the IDR 7 billion loss in Q4 2023.
- Cost of sales declined -4.8% YoY in Q4 2024, reaching IDR 11.24 trillion, thanks to lower raw material costs. Gross profit surged by 106% YoY to IDR 3.27 trillion, leading to a gross profit margin of 22.6% in Q4 2024, the highest in a year. Operating profit saw 577% YoY growth, reaching IDR 1.4 trillion, with an operating profit margin of 79.8%.
- We expect net profit to reach IDR 3.3 trillion in 2025, with further margin improvements as feed costs continue to decline, supported by lower raw material prices.
Valuation: Maintain BUY with a Target Price of IDR 2,530
- Our DCF valuation, using a 12% WACC, results in a target price of IDR 2,530, implying a 19% upside and an 8x 2025F PE ratio. We maintain our BUY rating on JPFA.
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