Enabling Resilience through Improved Volume
Key Takeaways :
▪️JFPA’s FY22 revenue came at IDR49.0tn, or soared +9.1% YoY (vs IDR44.9tn in FY21). The revenue was bolstered by a higher ASP coupled with a volume increase particularly in the feed segments.
▪️Yet, net profit slipped -29.8% YoY to IDR1.4tn (vs IDR2.0tn in FY21). FY22 net profits were pressured by margin contractions in commercial farms (FY22: -3.9% vs FY21: -1.9%), due to higher input costs, dragging the profits from the feed and poultry segments.
▪️Along with a Grand Parent Stock (GPS) import quota of 642k in FY21, we estimate an oversupply of live birds approximately 304mn-430mn in FY23E. We expect the government to carry out additional culling of 200mn-326mn throughout the year to stabilize live bird prices above the reference price.
▪️We expect nationwide carcass consumption to continue improving, which could benefit JPFA’s revenue streams, accompanied by: 1) resilient domestic consumption; 2) higher HoReCa traffic; 3) election period; 4) Ramadhan festive.
▪️We foresee that EBITDA margin could improve at most 8.4% in FY23E (vs 7.7% in FY22), yet still beneath its 5-year-average of 10.1% as headwinds are still overshadowing, primarily from elevating input costs which might undermine profitability.
▪️ We recommend BUY for JPFA IJ at a TP of IDR1,500, implying PE/PBV of 8.0x/1.0x in FY23E. We revised our target price from IDR2,050 as we cut our FY23E net profit by -28.7%, however we still view JPFA's valuation as attractive as it is currently trading near the level -1 STD PE Ratio (5-mean- average) of 9.5x. Downside risks include: 1) lower-than-expected sales volume; 2) weak DOC & Broiler prices.
MNCS Research
Disclaimer On
