Poultry - Initiation
- In general, chicken consumption has a positive
correlation with GDP growth. The increase in per capita income will increase
people's purchasing power of relatively affordable protein sources compared to
other protein sources. Up to now, chicken per capita consumption in Indonesia
is 10.5 kg/year, which is still very low when compared to chicken/capita
consumption in neighbouring countries such as Malaysia and Brunei.
- The growth of the middle-income people has
experienced an increasing trend in recent years. The growth of middle-income
people will increase the consumption of a more affordable source of protein,
namely chicken
- In 2021F, we expect the poultry industry to grow
positively again as the domestic economy recovers and per capita income in 2021F
- The government has attempted to prevent
oversupply by re-implementing chicken culling through a cross-monitoring
approach. Production adjustment instructions are carried out in 3 stages,
including cutting HE (hedge eggs) 19 days, delay HE settings, and PS (parent
stock) cutting.
-We initiate the Indonesian poultry sector with
overweight. Our preference for companies will be the ones leading market share,
have strong margins and robust growth prospect. The industry is currently
facing various hurdles such as oversupply, lower price, and the volatility of
raw materials. However, we believe that the poultry sector in Indonesia offers
tremendous growth potential for both the short and medium-term.
PT Japfa Comfeed Indonesia Tbk (JPFA IJ)
Better Capabilities for Capturing Growth
Opportunities
Rating: Buy
Target Price: 1,850
Key Investment Highlight:
- Growing responsibility
- Integrated Protein Solution
- Feed segment: the most profitable segment
- Expand downstream business through the
acquisition SGF
Key Risk:
- Raw Material Availability and Price Fluctuation
- Market Risk: Inflations and FX rate
- Epidemic: the Avian Influenza, Newcastle Disease,
and Bronchitis infection
- Competition
We initiate our coverage on PT Japfa Comfeed
Indonesia Tbk (JPFA) with Buy rating and IDR 1,850 target price, implies 11.5x
FY20F EV/EBITDA
Research Department
Atria @Sudirman Level 23B
Jl. Jend. Sudirman Kav. 33A, 10220 Jakarta
Ph: (62 21) 57900 800
Email: research@phillip.co.id
Website: www.poems.co.id
