Please consider the rating criteria & important disclaimer
JPFA posted the
upswing of 9.4% in 2017’s sales higher than the upswing
of 8.4% in 2016’s sales
. However, it posted decline of 15% in 2017’s
EBITDA compared to the incline of 55% in 2016’s EBITDA. The Animal
Feeds segment as the biggest contributor to the overall sales experienced
the contraction of EBIT margin from 13.4% in 2016 into 9.7% in 2017.
Margin Contraction
2016 was the exceptional year when low prices for agriculture
commodities flocking market were attributable to EBIT margin of the
Animal Feed segment to settle at 13.4%.
The Animal Feeds segment
posted the last 4
-
year EBIT margin average of was 11.4%
; indeed, its 2017
EBIT margin tumbled into 9.7% underlined by the high price of local corn.
Reaping Profit from Broiler Division
We project that the government regulation establishing the lowest selling
price for broiler chickens is potential for giving a
more stable profit
margin
. We oversee that only two out of 12 months in 2017, the selling
price for broiler chickens topped the lowest selling price for broiler set by
the government.
Target Price IDR1,820
Asia Pacific Poultry
JPFA A Glance at JPFA
JPFA is one of the biggest and prominent agro
-
food companies in Indonesia because of
its commitment to providing quality animal based protein since 1975.
The takeaway key for JPFA’s success roots from its integrated, inclusive, and
comprehensive services given to its customers through its robust distribution networks,
and wide
-
ranging agents across Indonesia.
It is committed to creating and giving added values to its industrial partners through its
robust production chains from quality animal feeds formulations, high quality day
-
old
chicks, broiler chickens, fish, shrimps, and cows farms to varied and integrated processed
food products.
JPFA’s Competitiveness in Asia Pacific
JPFA with the total asset topping USD1 billion has the highest potential for growth in
profit with the cheapest P/E of 10.6x ; therefore, these qualities nominate JPFA as the
most attractive stock pick in Asia Pacific.
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
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%
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
Multiple Valuation
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%
2.
Rating system based on a stock’s absolute return from the date of publication
Buy
: Greater than +15%
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.
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%
