Delivering Remarkable Improvement
Key Takeaways :
▪️ JPFA 3Q23 net profit stood at IDR855.3bn (+157.7% QoQ/+170.2% YoY), a significant increase supported by the feed margin rising to 24.5% (vs 17.6% in 2Q23 and 20.1% in 3Q22), thanks to higher ASP.
▪️ The government has commenced a culling cycle for Oct-Nov 2023 for 4.1mn Parent Stock (PS) and 46.8mn FS Hatched Egg (HE) 19 days to address the issue. This would translate to a DOC FS reduction by 157.5mn, or exceeding our target. We anticipate a rebound in broiler prices in Nov-23, propelled by the year-end festive season, which could drive JPFA's performance forward through its poultry-related segment (accounting for ~73% of turnover).
▪️ We have moderately raised net profit projections in FY23E/FY24F to IDR1.4tn/IDR1.9tn (+5.2%/+1.1% from previous estimates), primarily driven by cost management and pass-on strategies to strengthen margins. This could lead to net profit in FY23E flat at +0.9% YoY compared to FY22.
▪️ We upgrade our recommendation for JPFA to BUY with a TP of IDR 1,400/share. JPFA is currently trading close to -0.5 STD PE Ratio (5-year-average) of 10.1x. With the on track performances and favorable outlook through the achievement of the culling target, it could be a positive catalyst.
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