Site Visit Impression and Earnings uplift
Key Takeaways :
▪️ JPFA continued to deliver stellar performance, with 1H24 net profit reaching IDR1.5 tn (vs IDR82.0 bn in 1H23), exceeding our/cons estimates, with a run-rate of 79.6%/98.7% of FY24E targets.
▪️ We revisited JPFA’s mid-downstream facilities in Tangerang, Banten, specifically Ciomas Commercial Farm (CCF) and PT So Good Food (SGF). Assuming a density of 16 live birds per square meter and a 1% mortality rate, we estimate that the Tangerang CCF contributes 1-2% of Banten's total live bird production.
▪️ We observed further improvements during our visit to SGF, particularly in production capacity. Over the past year, SGF’s total manufacturing capacity has grown significantly, with value-added segment growth of +55% YoY, chilled & frozen sausage +125% YoY, and dairy +28% YoY. This expansion has led to the launch of several new products.
▪️ We maintain a BUY recommendation for JPFA with a higher TP of IDR2,080/share. We fine-tuned our net profit projections for FY24E/FY25F by +35.9%/+20.1% from our initial estimates. While La Nina may introduce volatility to corn prices, JPFA's extensive corn dryer facilities should provide a buffer. Downside risks include: 1) lower-than-expected DOC and broiler prices; 2) lower sales volumes; 3) lower-than-expected feed margin.
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