CPIN’s revenue amounted to IDR32.96 trillion in 6M24, growing 6.7% YoY from IDR30.89 trillion in 6M23. CPIN’s revenue growth during the first half of 2024 was driven by significant growth in two of its business segments, Day-old Chick (DOC) by 40% YoY to IDR1 trillion (vs IDR722 billion in 6M23) and Processed Chicken by 34.45% YoY to IDR6 trillion (vs IDR4.48 trillion in 6M23).

The increase in margin is in line with the decline in Corn and Soybean Meal (SBM) prices. The domestic corn price at the farmer level is IDR5,990/Kg, a significant 17.9% YTD decline from the 2024 starting price of IDR7,300/Kg. The decline in domestic corn prices is in line with the increasing harvest in the March-April 2024 period. Meanwhile, SBM prices stood at US$323/ton, down 14.84% YTD from the starting price of US$380/ton at the beginning of 2024. We assess that if the September-October harvest is abundant, then domestic corn prices have the potential to stabilize and thus improve the company’s profitability.

CPIN recorded net profit growth of 28.3% YoY to IDR1.76 trillion in 6M24. CPIN’s net profit growth was driven by top-line growth as well as operational and non-operational gains. We assess that if CPIN can maintain and even improve its operational efficiency, it will potentially improve CPIN’s bottom-line growth.

CPIN has an extensive distribution network. CPIN has a retail network selling Processed Chick products such as Prima Freshmart, which can serve online transactions and physical stores in various locations, making it easily accessible to retail consumers. CPIN also collaborates with modern retailers to expand market penetration and reach various consumer segments. In addition, CPIN also has a distribution network for the international market in exporting Processed Chick products to multiple countries. During 6M24, CPIN’s export sales grew significantly by 273% YoY to Rp90 billion (vs Rp24 billion in 6M23).

Using the Discounted Cash Flow method with Required Return of 7.70% and Terminal Growth 3.86%, we estimate CPIN’s fair value at IDR5,850 per share (Expected PE at 26.75x and EV/EBITDA at 15.06x in FY24). We give CPIN a Buy rating with potential upside of 21.87%.

By PHINTRACO SEKURITAS | Research
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