Buy Dec 2018 TP (IDR) 1,820 Consensus Price (IDR) 1,715 TP to Consensus Price +6.1% vs. Last Price +24.7%

(1)

Company Report | Mar 28, 2018

Japfa Comfeed Indonesia Tbk

(JPFA)

Laba Masih Memuaskan

Buy

Dec 2018 TP (IDR)

1,820

Consensus Price (IDR)

1,715

TP to Consensus Price

+6.1%

vs. Last Price

+24.7%

Shares data

Last Price (IDR)

1,460

Price date as of

Mar 27, 2018

52 wk range (Hi/Lo)

1,710/1,075

Free float (%)

37.0 Outstanding sh.(mn)

11,411

Market Cap (IDR bn)

17,001

Market Cap (USD mn)

1,275

Avg. Trd Vol - 3M (mn)

5.07 Avg. Trd Val - 3M (bn)

6.80 Foreign Ownership

99.9%

Basic Industry

Poultry

Bloomberg

JPFA IJ

Reuters

JPFA.JK

Joni Wintarja

+62 21 797 6202, ext:138

[email protected]

Japfa Comfeed Indonesia , Tbk | Summary (IDR bn)

2016/12A

2017/12A

2018/12E

2019/12E

Sales

27,063

29,603

33,793 38,625

Sales growth

8.2%

9.4%

14.2%

14.3%

EBITDA

3,563

3,022

3,424 4,044

Net profit

2,065

997 1,619 1,955

EPS (IDR)

181

87 142 171

EPS growth

340.9%

-51.7%

62.3%

20.7%

BVPS (IDR)

821

858 976 1,108

EBITDA margin

13.2%

10.2%

10.1%

10.5%

NPM

7.6%

3.4%

4.8%

5.1%

ROE

26.7%

10.4%

15.5%

16.4%

ROA

11.3%

4.9%

7.3%

8.2%

ROIC

16.3%

9.2%

11.7%

13.2%

P/E

8.0x

14.9x

10.6x

8.8x

P/BV

1.8x

1.5x

1.4x

EV/EBITDA

6.0x

6.9x

6.7x

5.7x

DPS (IDR)

14

50 24 39

Dividend yield

1.0%

3.8%

1.6%

2.6%

Source: Company Data, Bloomberg, NHKS Research

Share Price Performance

YTD

1M

3M

12M

Abs. Ret. 15.0%

-5.4%

10.7%

-4.5%

Rel. Ret.

15.8%

-1.0%

7.7% -18.7%

Peningkatan 9,4% pada Penjualan FY2017

Pada 2017 penjualan JPFA meningkat 9,4% yang lebih tinggi dibandingkan

dengan peningkatan penjualan 8,2% pada 2016. Namun EBITDA

mengalami penurunan 15% pada 2017 dibandingkan dengan kenaikan

55% pada 2016. Divisi pakan ternak sebagai kontributor terbesar terhadap

total penjualan mengalami kontraksi EBIT margin dari 13,4% pada 2016

menjadi 9,7% pada 2017.

Kontraksi Margin

Tahun 2016 merupakan tahun istimewa

di mana kondisi pasar dengan

harga komoditas agri yang murah menyebabkan EBIT margin divisi pakan

ternak berada pada posisi 13,4%. Rata-rata EBIT margin divisi pakan

ternak sepanjang 4 tahun terakhir adalah sebesar 11,4%. Pada 2017 EBIT

margin turun ke level 9,7% akibat tingginya harga jagung domestik.

Potensi Keuntungan dari Divisi Broiler

Kami berharap kebijakan pemerintah yang menetapkan harga jual

terendah untuk ayam broiler dapat memberikan margin keuntungan yang

lebih stabil. Kami mengamati bahwa pada 2017, hanya dua dari 12 bulan

di mana harga broiler berada di atas harga acuan terendah dari

pemerintah.

Target Harga Rp1.820

Kami menggunakan estimasi forward EV/EBITDA sebesar 6,2x (0,6 SD di

atas rata-rata 3 tahun sebesar 5,4x) sebagai basis metode valuasi untuk

memperoleh target harga. Target harga ini mengimplikasikan EV/EBITDA

2018E sebesar 7,4x. Saat ini, JPFA diperdagangkan pada EV/EBITDA 2017E

sebesar 6,7x.

(2)

Asia Pacific Poultry

Sekilas tentang JPFA

JPFA merupakan salah satu perusahaan agri-food terbesar dan terkemuka di tanah air,

dan penghasil protein hewani berkualitas dan terpercaya yang dengan setia melayani

kebutuhan serta menjadi kebanggaan Indonesia sejak 1975.

Kunci kesuksesan JPFA berakar dari konsep layanan terpadu, lengkap, dan menyeluruh

yang diberikan kepada seluruh pelanggan JPFA melalui kekuatan jaringan distribusi, dan

keagenan yang tersebar di seluruh wilayah Indonesia.

JPFA senantiasa menciptakan dan memberikan nilai-nilai tambah kepada mitra industri

melalui kekuatan rantai produksi dari formulasi pakan ternak berkualitas, bibit ternak

unggul, peternakan ayam broiler, ikan, udang, dan sapi potong hingga produk-produk

makanan olahan yang menyeluruh dan terintegrasi.

Daya Saing JPFA di Asia Pasifik

Dengan total aset di atas USD1 miliar, JPFA memiliki potensi pertumbuhan laba yang

paling tinggi dengan P/E yang paling murah hanya sebesar 10,6x. Dua kekuatan tersebut

membuat JPFA menjadi pilihan yang paling atraktif di Asia Pasifik.

Source: Bloomberg, NHKS research

Company

Market

Cap

(USD mn)

Total Asset

(USD mn)

Net Profit

Growth

Net Profit

Margin

ROE

P/E

P/BV

Dividend

Yield

JPFA

1,275

1,552

62.3%

4.8%

15.5%

10.6x

1.5x

1.6%

CPIN

4,082

1,788

31.4%

6.2%

20.6%

15.9x

3.1x

2.0%

MAIN

113 289 648.3%

2.7%

8.5%

10.3x

0.8x

1.4%

Thailand

CHAROEN POKPHAND FOODS

6,895

18,221

3.8%

3.0%

10.1%

12.8x

1.2x

3.8%

Malaysia

CAB CAKARAN CORP BHD

146

252 68.7%

3.9%

19.2%

8.6x

1.4x

0.3%

India

GODREJ AGROVET LTD

1,899

496 -5.7%

5.1%

27.8%

45.8x

11.8x

2.0%

AVANTI FEEDS LTD

1,506

163 162.4%

7.8%

45.0%

21.6x

3.7x

0.4%

Vietnam

MASAN GROUP CORP

4,689

2,798

11.1%

8.2%

20.6%

35.5x

7.2x

1.1%

China

CHUYING AGRO-PASTORA GROUP-A

1,934

2,439

-1.2%

14.3%

15.3%

16.3x

2.2x

1.7%

TECON BIOLOGY CO LTD - A

1,188

647 11.6%

8.9%

14.6%

18.9x

2.6x

1.3%

BAIYANG INVESTMENT GROUP -A

671

276 32.8%

2.9%

5.0%

42.9x

2.0x

0.5%

NEW HOPE LIUHE CO LTD-A

4,994

5,387

-10.0%

4.1%

11.2%

13.8x

1.5x

6.7%

JUEWEI FOOD CO LTD-A

2,152

283 26.4%

11.7%

28.7%

31.3x

8.2x

1.0%

SHANDONG LONGDA MEAT FOOD-A

1,232

331 -16.1%

4.3%

10.5%

40.9x

4.1x

0.9%

(3)

Source: Company, NHKS research

Feed Division Metric | 2013 - 2017

Source: Company, NHKS research

Sales Growth | 2013 - 2017

Source: Company, NHKS research

Feed Division EBIT Margin | 2016 - 2017

Source: Company, NHKS research

Feed Division Sales Growth | 2016 - 2017

Source: Company, NHKS research

Sales Trend | 2014 - 2018

Source: Company, NHKS research

Sales Breakdown | FY2017

(4)

Multiple Valuation

Forward EV/EBITDA Band | Last 3 years

Source: NHKS research

Dynamic Forward EV/EBITDA Band | Last 3 years

Source: NHKS research

Rating and target price update

Target Price Revision

Date

Rating

Target Price

Last Price

Consensus

vs Last Price

vs Consensus

03/15/2017

Buy

2,240 (Dec 2017)

1,595

2,029

+40.4%

+10.4%

06/22/2017

Buy

1,860 (Dec 2017)

1,350

1,532

+37.8%

+21.4%

08/10/2017

Buy

1,710 (Dec 2017)

1,110

1,489

+54.1%

+14.8%

11/10/2017

Buy

1,740 (Dec 2018)

1,275

1,628

+36.5%

+6.9%

01/25/2018

Buy

1,820 (Dec 2018)

1,460

1,649

+24.7%

+10.4%

03/28/2018

Buy

1,820 (Dec 2018)

1,460

1,715

+24.7%

+6.1%

Source: NHKS research, Bloomberg

Closing and Target Price

Source: NHKS research

Analyst Coverage Rating

Source: Bloomberg

NH Korindo Sekuritas Indonesia (NHKS) stock ratings

1. Period: End of year target price

2. Rating system based on a stock’s absolute return from the date of publication



Buy

: Greater than +15%

(5)

Summary of Financials

DISCLAIMER

This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees, and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for errors, omissions, misstatements, negligence, inaccuracy arising herefrom.

JPFA Summary

Last Price (IDR) 1,460

Target Price (IDR) 1,820 2016/12A 2017/12A 2018/12E 2019/12E

Rating: Buy ROE 26.7% 10.4% 15.5% 16.4%

ROA 11.3% 4.9% 7.3% 8.2%

ROIC 16.3% 9.2% 11.7% 13.2%

EBITDA/Equi ty 46.0% 31.5% 32.7% 34.0%

in IDR Bn 2016/12A 2017/12A 2018/12E 2019/12E EBITDA/As s ets 11.3% 4.9% 7.3% 8.2%

Sales 27,063 29,603 33,793 38,625 Ca s h Di vi dend IDR bn) 160 570 275 447

Growth (% y/y) 8.2% 9.4% 14.2% 14.3% Di vi dend Yi el d (%) 1.0% 3.8% 1.7% 2.7%

Cost of Revenue (21,584) (24,572) (27,901) (31,813) Pa yout Ra ti o (%) 34.1% 27.6% 27.6% 27.6%

Gross Profit 5,479 5,031 5,892 6,812 DER 62.6% 62.0% 54.5% 41.3%

Gross Margin 20.2% 17.0% 17.4% 17.6% Net Gea ri ng 91.0% 89.7% 74.8% 54.3%

Opera ti ng Expens es (2,558) (2,781) (3,303) (3,775) LT Debt to Equi ty 38.5% 53.8% 39.7% 35.0%

EBIT 2,921 2,250 2,589 3,036 Ca pi ta l i za ti on Ra ti o 38.5% 38.3% 35.3% 29.2%

EBIT Margin 10.8% 7.6% 7.7% 7.9% Equi ty Ra ti o 48.7% 46.4% 48.1% 52.0%

Depreci a ti on 642 772 835 1,008 Debt Ra ti o 30.5% 28.8% 26.2% 21.5%

EBITDA 3,563 3,022 3,424 4,044 Fi na nci a l Levera ge 221.7% 200.9% 201.5% 194.8%

EBITDA Margin 13.2% 10.2% 10.1% 10.5% Current Ra ti o 213.0% 234.6% 199.2% 212.3%

Interes t Expens es (510) (569) (556) (556) Qui ck Ra ti o 75.3% 66.7% 54.8% 45.7%

EBT 2,767 1,741 2,429 2,933 Ca s h Ra ti o 52.0% 34.4% 30.4% 16.9%

Income Ta x (595) (633) (607) (733) Cash Conversion Cycle 83.0 80.1 74.4 74.4 Mi nori ty Interes t (107) (110) (203) (245) Pa r Va l ue (IDR) 200 200 200 200

Net Profit 2,065 997 1,619 1,955 Tota l Sha res (mn) 11,411 11,411 11,411 11,411

Growth (% y/y) 340.9% -51.7% 62.3% 20.7% Sha re Pri ce (IDR) 1,455 1,300 1,460 1,460

Net Profit Margin 7.6% 3.4% 4.8% 5.1% Ma rket Ca p (IDR tn) 16.6 14.8 16.7 16.7

In IDR bn 2016/12A 2017/12A 2018/12E 2019/12E 2016/12A 2017/12A 2018/12E 2019/12E

Ca s h 2,701 1,642 1,891 1,014 Pri ce /Ea rni ngs 8.0x 14.9x 10.3x 8.5x

Recei va bl es 1,212 1,541 1,513 1,729 Pri ce /Book Va l ue 1.8x 1.5x 1.5x 1.3x

Inventori es 6,259 7,332 8,091 9,225 Pri ce/Sa l es 0.6x 0.5x 0.5x 0.4x

Total Current Assets 11,061 11,189 12,377 12,747 PE/EPS Growth 0.0x -0.3x 0.2x 0.4x

Net Fi xed As s ets 7,541 8,386 9,751 10,685 EV/EBITDA 6.0x 6.9x 6.5x 5.5x

Other Non Current As s ets 649 1,514 1,038 883 EV/EBIT 7.3x 9.3x 8.7x 7.4x

Total Assets 19,251 21,089 23,166 24,315 EV (IDR bn) 21,249 20,836 22,413 22,439

Pa ya bl es 2,317 3,216 3,652 4,164 Sa l es CAGR (3-Yr) 8.1% 6.6% 10.5% 12.6%

ST Ba nk Loa n 2,260 797 1,647 797 EPS CAGR (3-Yr) 51.4% 43.2% 51.2% -1.8%

Other Current Liab. 616 756 914 1,044 Ba s i c EPS (IDR) 181 87 142 171

LT Debt 3,609 5,272 4,422 4,422 Di l uted EPS (IDR) 181 87 142 171

Other Non Current Li a b. 1,075 1,251 1,391 1,239 BVPS (IDR) 821 858 976 1,108

Total Liabilities 9,878 11,293 12,026 11,667 Sa l es PS (IDR) 2,372 2,594 2,962 3,385

Shareholders' Equity 9,373 9,796 11,139 12,648 DPS (IDR) 14 50 24 39

In IDR bn 2016/12A 2017/12A 2018/12E 2019/12E 2016/12A 2017/12A 2018/12E 2019/12E

Net Income 2,065 997 1,619 1,955 DCF (IDR bn)

Deprec & Amorti za ti on 642 772 835 1,008 NOPAT 2,293 1,432 1,942 2,277

Chg. In Worki ng Ca pi ta l 73 (965) (345) (604) +Depr./Amor. 642 772 835 1,008

CFO 2,780 805 2,109 2,358 -CAPEX (787) (1,537) (2,200) (1,941)

Ca pex (787) (1,537) (2,200) (1,941) -Incr. (Decr.) i n Worki ng Ca p. 73 (965) (345) (604)

CFI (524) (1,399) (1,585) (1,938) (Unl evered) FCFF 2,221 (297) 231 739

Di vi dends Pa i d (240) (536) (275) (447) WACC

Net Borrowi ng (PMT) (829) 200 - (850) Cos t of Debt (Ta x Adj.) 9.3% 7.6% 8.8% 8.9%

CFF (456) (466) (275) (1,297) Cos t of Equi ty (COE) 10.5% 12.3% 12.3% 12.3%

Net Changes in Cash 1,800 (1,059) 249 (876) WACC (%) 10.2% 10.9% 11.4% 11.5%

RIM

Sprea d (FROE-COE) (%) 23.3% -1.7% 4.2% 5.2%

Res i dua l Income (IDR bn) 1,421 (156) 414 585

By Geography % Shareholders % Equi ty Cha rge 643 1,153 1,205 1,370

Si nga pore 75.2 Ja pfa PTE LTD 51.0 EVA

Uni ted Sta tes 5.8 KKR Ja de INV 12.0 Inves ted Ca pi ta l (IDR bn) 12,934 15,242 15,865 17,209

Irel a nd 0.2 Va ngua rd Group 2.2 ROIC-WACC (%) 7.5% -1.5% 0.9% 1.7%

Luxembourg 0.2 Di mens i ona l Fund 1.3 EVA (IDR mn) 971 (235) 139 299

OWNERSHIP

PROFITABILITY & STABILITY

March 27, 2018 Dec 2018

INCOME STATEMENT

BALANCE SHEET

VALUATION INDEX

Analyst: Joni Wintarja