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 Malindo Feedmill Tbk (MAIN IJ)
2020: Postponed Growth Momentum
Rating: Buy
Target Price: 1,010
Key Investment Highlight:
- Superior growth ability
- Strong growth in the processed food segment
- Sector recovery brings a positive impact
to 3Q20 MAIN’s sales.
Key Risk:
- Raw Material Availability and Price Fluctuation
- Market Risk: Inflations and FX rate
- Epidemic: the Avian Influenza, Newcastle
Disease, and Bronchitis infection
We initiate our coverage on PT Malindo Feedmill
Tbk (MAIN) with Buy rating and IDR 1,010 target price, implies 8.2x FY21F
EV/EBITDA.
PT. Phillip Sekuritas Indonesia
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
