JPFA
Contact our analyst Eka
BUY, 42.5% upside.
10th May 2022
Price Rp 1,375
Target price Rp 1,960
10th May 2022
Price Rp 1,375
Target price Rp 1,960
Demand Continues to Grow
- With the recovery in economic growth & inline with increasing public mobility, JPFA recorded higher sales in the first quarter.
- In the 1Q2022, JPFA revenue increased +12.9% YoY to IDR 12.15 trillion due to higher volumes & average selling prices (ASPs) in all businesses. JPFA improving sales trend continues with quarterly growth since the drop in 2020.
- Commercial farms contributed IDR 4.6 trillion to total sales, up +8.4% YoY. The growth was due to higher live bird sales volume, +9.7% YoY and an ASP increase of +5.9% YoY in 1Q2022.
- Feed sales increased +12.2% YoY to IDR 3.59 trillion inline with a volume increase of +4.5% YoY in 1Q2022.
- DOC sales decreased -16.9% YoY but slightly increased +1.2% compared to the 4Q2021 at IDR 625 billion, while DOC’s ASP continued to improve with +6.2% YoY growth and volume grew by +5% YoY.
- We are expecting JPFA sales in 2Q2021 will be higher in line with higher demand due to the Eid holiday and higher ASPs. For 2022F, we expect JPFA’s sales will reach IDR 49.5 trillion as demand and prices continue to recover.
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Margin Up QoQ
Valuation: Maintain BUY with TP 1,960
- In 1Q2022, JPFA booked a net profit of IDR 604 billion +17% QoQ but lower -17.6% YoY from a decrease in broiler prices in February 2022 compared to 1Q2021. The NPM grew slightly QoQ from 4.3% in 4Q2021 to 5.0% although was lower compared to 1Q2021’s 8.0%.
- JPFA 1Q2022 gross profit decreased -24% YoY to IDR 2.13 trillion due to a higher cost of sales +26% YoY inline with higher raw material prices and shipping costs. This resulted in a lower gross profit margin of 17.6% from 25.9% in 1Q2021 but slightly higher than 17.2% in 4Q2021.
- Operating profit reached IDR 1.0 trillion, a decrease of -25% YoY, in line with a lower OPM of 8.2% from 12.4% in 1Q2021.
- As commodity prices and shipping costs have jumped, we expect JPFA’s margins will contract in 2022F. For 2022F, we are expecting JPFA’s profit will rise slightly, 1% YoY, to IDR 2.05 trillion.
Valuation: Maintain BUY with TP 1,960
- Using a DCF valuation with WACC of 12%, we are targeting JPFA to trade at a 9.9x 2023F PE within a year. Target Price is IDR 1,960 which represents 42.5% upside. We maintain our recommendation to BUY.
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