JPFA - ASP could gradually improve, after soft 1Q25 earnings

KBVS Update  
Wednesday, 7 May 2025

JPFA - ASP could gradually improve, after soft 1Q25 earnings
(Maintain BUY; with TP: IDR2,300)

Japfa Comfeed Indonesia’ (JPFA) revenue only reached IDR14.3 tn (+2.9% yoy/-1.3% qoq) in 1Q25 mainly due to lower LB’ ASP (-4.6% yoy/-4.7% qoq) in 1Q25 despite higher sales and consumption of chickens (LB, DOC) during Ramadan festivities. Note that, JPFA’ revenue from its LB segment declined 2.9% yoy/6.5% qoq to IDR5.58 tn or around 38.9% of its total revenue in 1Q25. Thus, JPFA’ 1Q25 revenue still came in-line with ours’ (23.3%) and cons’ expectation (23.8%).

JPFA' gross profit and EBIT reached IDR2.7 tn (+8.9% yoy/-17.7% qoq) and IDR1.12 tn (+0.3% yoy/-21.8% qoq), respectively in 1Q25 due to NFA' latest floor price for LC at IDR5,500 per kg since Feb’25 with higher opex as the company gave a mandatory religious holiday allowance in Mar’25.

Thus, JPFA’ 1Q25 earnings only reached IDR680 bn (+2.3% yoy/-26.3% qoq) on lower chicken’ ASP with higher costs pressure, which came below ours’ (19.6%) and cons’ expectation (19.9%).

After a soft 1Q25 earnings, we slightly adjusted our JPFA '25F revenue (-0.4% from prior) and earnings (-2.4% from prior). Thus, we still expect its revenue and earnings to grow by 9.7% yoy and 12.3% yoy, respectively in ‘25F on higher consumption of chickens (LB, DOC) on government free nutritious food program, with chickens’ (LB, DOC) ASP improvement gradually, lower SBM prices and stable LC’ prices, despite  our anticipation on a possibility of softer chickens' demand in 2Q25F and 3Q25F due to lack of festivities.

Maintain Buy on JPFA with lower TP of IDR 2,300/share, which implies 7.9x ‘25F P/E or at -0.5 stdv of its 5 years mean P/E. Currently, JPFA is trading at 6.1x ‘25F P/E or slightly above its -1stdev of its 5 years’ mean P/E.

Regards,
Andre Suntono – KBVS Research Team