JPFA
Contact our analyst Eka
Buy, 46% upside.
6th May 2024
Price Rp 1215
Target price Rp 1770
6th May 2024
Price Rp 1215
Target price Rp 1770
Improved Prices and margin hike
- JPFA maintained double-digit sales growth of 18.4% YoY and 3.9% QoQ, reaching IDR 13.9 trillion in Q1 2024, driven by higher sales volumes across all business units. The feed segment continued to deliver growth, with sales increasing by 13.4% YoY and 6.5% QoQ to IDR 4.01 trillion, fueled by a 6.9% YoY increase in sales volume and higher average selling prices (ASP). Stable feed margins were achieved by passing on raw material price increases, with the feed margin rising to 18.5% from 16.7% in Q4 2023.
- JPFA's sales maintained double-digit growth of 18.4% YoY or 3.9% QoQ, to IDR 13.9 trillion in Q1 2024 due to higher sales volume in all business.
- The commercial farm segment also showed robust growth, with sales up 28.2% YoY to IDR 5.74 trillion, driven by a 7.9% increase in sales volume and a higher ASP. The operating profit margin for this segment turned positive at 5.2% in Q1 2024, recovering from a -10.3% margin in Q4 2023, as live bird prices increased in the market due to higher demand during Ramadan.
- The poultry processing and consumer products segment reported an 11.9% YoY increase in sales to IDR 2.06 trillion, with an improved operating profit margin of 3%.
- The Day-Old Chick (DOC) business segment achieved a positive margin of 32.5% on higher DOC prices, while sales volumes rose by 11.9% YoY, leading to a 36.9% YoY increase in DOC sales to IDR 720 billion.
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Q1 2024: Profit after a Loss
Valuation: Maintain BUY with lower TP 1,770
- JPFA recorded a net profit of IDR 665 billion in Q1 2024, a significant turnaround from a loss of IDR 250 billion in Q1 2023 and IDR 7 billion in Q4 2023, attributed to price improvements in both broilers and DOCs.
- Cost of sales rose by 9.3% YoY but decreased by -3% QoQ to IDR 11.4 trillion, in line with a 12% YoY increase in raw materials costs. Gross profit surged by 96.3% YoY to IDR 2.47 trillion, with a gross profit margin of 17.8% in Q1 2024.
- JPFA also reported an operating profit of IDR 1.07 trillion, reflecting a substantial improvement from the previous year.
- Based on these improvements, we have revised JPFA's 2024 forecast, with bottom-line profit expected to reach IDR 1.8 trillion.
Valuation: Maintain BUY with lower TP 1,770
- Our DCF valuation, using a WACC of 8.9%, sets a target price for JPFA at IDR 1,770, representing 46% upside and a 10X 2025F PE ratio. We maintain our BUY rating.
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