JPFA recorded revenue growth of 14.46% YoY to IDR27.64 trillion in 6M24. JPFA’s double-digit revenue growth was supported by a significant increase in revenue of the Poultry Breeding segment by 48.35% YoY to IDR1.60 trillion. We assess JPFA’s performance in 2H24 has the potential to remain solid, along with relatively stable Live Bird and Day Old Chick prices.

Corn and Soybean Meal (SBM) prices have decreased significantly. The domestic corn price at the farm gate stood at IDR5,780/kg, down significantly by 20.8% YTD from the starting price of IDR7,300/kg at the beginning of 2024. Meanwhile, SBM prices stood at US$302/ton, down 20.4% YTD from the starting price of US$380/ton at the beginning of 2024. We expect corn and SBM prices to stabilize in the future as the domestic corn harvest period in September-October 2024.

JPFA’s net profit grew 1,318% YoY to IDR1.59 trillion in 6M24. The significant growth in net profit was supported by cost efficiency and non-operational performance. We expect JPFA’s net profit to grow 180% YoY to IDR2.64 trillion in FY24E, in line with revenue growth of 7.93% YoY to IDR55.23 trillion in FY24E.

The Closed-House system at JPFA’s poultry farms can improve the quality of poultry. Implementing the Closed-House system on all JPFA poultry farms can help reduce the risk of climate change and reduce the impact on the environment (odors and flies), therefore minimizing the potential for disease, fostering high productivity, and improving poultry quality.

PT So Good Food (SGF) uses environmentally friendly fuel. SGF seeks to replace coal fuel with palm kernel shells in the boiler engine to reduce fly ash bottom ash (FABA) waste and emissions. We expect SGF’s revenue to potentially increase in FY24, along with adding a new nugget processing line with a production capacity of up to 2.5 tons per hour.

Using the Discounted Cash Flow method with Required Return of 9.85% and Terminal Growth 4.01%, we estimate JPFA’s fair value at IDR1,990 per share (Expected PE at 6.31x and EV/EBITDA ad 4.88x in FY24). We give JPFA a Buy rating with potential upside of 25.13%.

By PHINTRACO SEKURITAS | Research
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