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JCI JKSE JPFA
PT. Japfa Comfeed Indonesia, Tbk (JPFA)
Company Update: November 1, 2016
Japfa Comfeed Indonesia is currently
one of the largest poultry feed producer
in the country. Other than chicken feeds,
JPFA’s business segments also includes
commercial
farming,
day-old-chick
(DOC) nursery, processed food under
the brand ‘So Good’, aquaculture, and
beef under the brand ‘Santori’.
Profitability Has Improved
Sales Revenue in 9M2016 period grew 10% to Rp20.6 tn from Rp18.7
tn in the year before (
Exhibit 1
). The company also managed to book
net profit of Rp1.7 tn from Rp147 bn of net loss in the same period
last year.
(tn = trillion, bn = billion).
Net profit achievement is significantly above our previous estimate of
Rp536 bn for FY2016 period, thanks to improving margins as a result
of debt restructuring program after the arrival of KKR Jade Investment
as Japfa’s new strategic investor, earlier in June. The significant
recovery of chicken and feeds selling price after culling program also
managed to increase the company’s sales revenue.
We believe the upcoming bond refinancing program (
Exhibit 2
) will be
a positive catalyst that will improve the company’s financial
performance furthermore, however we also have to watch the
ongoing legal process following the recent allegation from KPPU (
The
Commission for the Supervision of Business Competition)
which
requires the company to pay a significant amount of fine (
Exhibit 3
).
Opportunities and challenges in the future: better leverage, legal
issues
We see the company’s decision to welcome new strategic investor
that helps to improve financial leverage is a good decision especially
in the effort to lower borrowing cost furthermore. With better debt
and equity ratios, Japfa will have a slightly higher bargaining power
for further financing. As for the commercial farm and feed industry,
we believe the market will continue to grow, along with expected
recovery in consumer’s purchasing power that will improve protein
consumption.
However, we hope there will be certainty in the near future about
Japfa’s decision to proceed the case of KPPU’s chicken industry cartel
allegation.
Rating and Recommendation
We are maintaining Buy rating with higher target price at Rp2200 per
share which implies 11x of 2017E P/E Ratio.
Our projection is already based on the possibility of further financial
improvement as a result of the upcoming bond refinancing program,
and expected further increase in chicken and feeds sales.
Risks to our estimates
We see the chicken industry’s legal issues with KPPU will take much
effort to settle, that is feared to increase the volatility of supply,
demand, and selling prices of chicken and feeds in the future.
Current Price (Rp)
1,885
2017E P/E
9.5
Target Price (Rp)
2,200
2017E P/E
11.1
Basic Indust ry, Poult ry
Bloomberg ticker
JPFA.IJ
Reuters ticker
JPFA.JK
52-w eeks-low
(Rp)
379
52-w eeks-high
(Rp)
1,975
Shares Outstanding
(mn shares)
10,661
Daily average vol
('000 shares)
7,751
Daily average val
(Rp bn)
12.7
Daily average val
(US$ '000)
974
USDIDR
13,035
Market Cap
(Rp tn)
21.5
Market Cap
(US$ mn)
1,650.1
Major Shareholders (%):
Japfa Ltd
51.00
KKR Jade Investment Pte Ltd
11.98
Public & others
37.02
Relat ive Performance vs JCI JKSE:
www.reliance-securities.com, www.relitrade.com |
Please see important disclosure information on the final page of this document
your
reliable
partner
| 2
PT. Japfa Comfeed Indonesia, Tbk (JPFA)
CPIN, 33% JPFA, 21% Cheil Jedang, 8% MAIN, 6% SIPD, 5% Wonokoyo, 4% Others, 23% Animal Feed Production Capacity Share, 2013-2014 CPIN, 31% JPFA, 21% Cheil Jedang, 1% MAIN, 8% SIPD, 6% Wonokoyo, 5% Others, 28% DOC Production Capacity Share, 2013-2014
Sources: Ministry of Agriculture,
Rabobank International Research,
Reliance Research.
Exhibits
Exhibit 1:
INCOME STATEMENT: BALANCE SHEET:
(Rp bn) 2014 2015 2016E 2017E 2018E ASSETS: 2014 2015 2016E 2017E 2018E
Net Sales 24,458.9 25,022.9 27,743.1 31,036.5 35,031.1 Cash & Equivalents 768.5 901.2 1,142.0 3,260.8 5,911.6 Gross Profit 3,425.6 3,993.0 5,644.7 6,392.4 7,302.8 ST Investment 11.3 11.3 11.3 11.8 12.4 EBT 551.4 697.7 2,956.5 3,380.1 3,898.0 Trade acc receivables 1,242.6 1,199.7 1,252.9 1,315.6 1,381.4 EAT 391.9 524.5 2,222.6 2,541.0 2,930.3 Other trade acc rcvbls 70.1 54.2 77.3 81.2 85.3 Net Income (Loss) 339.3 468.2 1,984.2 2,268.5 2,616.0 Inventories 5,133.8 5,855.0 6,197.8 6,507.7 6,833.1 EPS 31.8 43.9 173.9 198.8 229.3 Breeding Chickens 702.7 632.3 712.9 698.6 691.6 Advances 303.9 422.0 584.3 613.6 644.2 Current Price 1,885 Prepaids 476.4 528.5 368.7 387.1 406.4 P/E 9.5 Taxes 436.3 481.8 294.2 309.0 324.4 Target Price 2,200 Expenses 40.1 46.7 74.4 78.1 82.0
P/E 11.1 Tot al Current Asset s 8,709.3 9,604.2 10,347.3 12,876.5 15,966.1
Market Cap (tn Rp) 21.5 Restricted Cash 1.5 2.1 1.8 2.0 2.2 Market Cap (mn US$) 1,650 Deffered Tax Assets 129.2 116.2 102.8 113.1 124.4 Investment in shares of stock 0.2 0.2 21.2 21.2 21.2
Rat ios and Margins: Goodw ill 70.1 70.1 70.8 70.8 70.8 Net Sales grow th 14.2% 2.3% 10.9% 11.9% 12.9% Plantations-net 2.4 2.4 2.5 2.6 2.7 Gross Profit margin 14.0% 16.0% 20.3% 20.6% 20.8% Breeding Cattles 304.0 279.9 202.7 200.7 198.7 EBT margin 2.3% 2.8% 10.7% 10.9% 11.1% Investment Properties 52.6 19.8 161.0 159.4 157.8 Net Profit margin 1.4% 1.9% 7.2% 7.3% 7.5% Fixed Assets 6,361.6 6,809.0 6,955.5 6,901.3 6,660.7 Net Profit grow th -43.0% 38.0% 323.8% 14.3% 15.3% Unused Assets-net 21.1 142.4 - - -ROA 2.2% 2.7% 11.0% 11.1% 11.2% Real Estate Assets 25.8 26.8 27.1 29.8 32.8 ROE 6.6% 7.7% 23.2% 20.9% 19.3% Other Assets 81.1 86.3 81.6 89.8 98.7 Net Debt (Cash) 6,464.6 5,919.8 3,583.1 1,432.0 (1,250.7) Tot al NC Asset s 7,049.6 7,555.3 7,627.1 7,590.7 7,370.1
Total Equity 5,179.5 6,109.7 8,537.5 10,858.4 13,545.2 Tot al Asset s 15,759.0 17,159.5 17,974.4 20,467.2 23,336.1
DER 125% 97% 42% 13% -9%
DPR (as paid) 31.4% 25.0% 6.9% 6.5% 6.1% LIABILITIES:
DPS (as paid) 10.0 11.0 12.0 13.0 14.0 ST Bank Loans 2,212.9 1,863.2 491.2 486.3 481.4 BVPS 485.9 573.1 748.2 951.6 1,187.1 Trade acc payable 2,004.3 2,745.8 2,838.9 2,980.8 3,129.9 Other acc payable 181.1 166.5 194.5 192.6 190.6
EQUITIES: Taxes Payable 41.7 137.5 220.2 231.2 242.8 Capital Stock 1,666.3 1,666.3 1,816.3 1,816.3 1,816.3 Accrued Expenses 147.7 190.8 247.0 259.4 272.4 Additional Paid-in Capital 895.6 895.6 1,447.3 1,447.3 1,447.3 Advances Received 45.7 45.1 33.0 34.6 36.4 Forex diff,trnsltion adj - 28.9 23.3 23.3 23.3 Current Portion of LT Liabs 281.8 203.8 104.2 103.2 102.1 Treasury Stocks (17.7) (17.7) (17.7) (17.7) (17.7) LT Loans 278.3 201.1 102.8 101.7 100.7 Retained Earnings 2,299.2 2,797.6 4,671.7 6,803.4 9,271.4 Fix Assets purchasing liabs 0.5 0.2 0.2 0.2 0.2 Appropriated 165.0 175.0 186.7 196.7 206.7 Leasing liabs 3.0 2.4 1.3 1.3 1.3 Unappropriated 2,134.2 2,622.6 4,485.0 6,606.7 9,064.7 Tot al Current Liabilit ies 4,916.4 5,352.7 5,628.4 5,787.5 5,955.0
Differences, Other Equity (88.7) 241.3 (98.9) (98.9) (98.9) Defered Tax Liabs 10.4 10.4 1.3 1.3 1.4
Sub Tot al Equit y 4,754.7 5,611.9 7,841.9 9,973.7 12,441.6 LT Employee Benefit Liabs 907.0 925.6 1,174.8 1,204.2 1,234.3 Non Controlling Interest 424.8 497.8 695.6 884.7 1,103.6 LT Liabilities 522.5 514.6 79.8 79.0 78.2
Tot al Equit y 5,179.5 6,109.7 8,537.5 10,858.4 13,545.2 LT Loans 518.8 510.2 79.2 78.4 77.6 Fix Assets purchasing liabs 0.7 3.2 0.2 0.2 0.2
9 MONTHS: 2015 2016 Leasing Liabilities 3.0 1.1 0.4 0.3 0.3 Net Sales 18,735.6 20,601.3 Bonds Payable 4,223.1 4,246.5 2,552.6 2,527.1 2,501.8
change 10% Tot al NC Liabilit ies 5,663.0 5,697.1 3,808.4 3,811.5 3,815.6
Gross Profit 2,708.4 4,397.7 Tot al Liabilit ies 10,579.4 11,049.8 9,436.9 9,599.0 9,770.6
margin 14.5% 21.3%
Net Income (Loss) (147.3) 1,724.9
