Japfa Comfeed Indonesia (JPFA IJ)

FY24 earnings: in line but beat consensus; solid 4Q24 driven by robust livebird segment

• JPFA booked a net profit of Rp923bn in 4Q24, bringing FY24 net profit to Rp3.0tr, in line with our estimate but above consensus (110%).
• The solid results were supported by improving livebird margins, although feed and DOC margins experienced a decline on a qoq basis.
• We adjust our FY25/26F est. by +7.2/-1.8% but keep our TP unchanged at Rp2,800; maintain Buy rating on attractive FY25 growth outlook.

Robust net profits beating consensus on higher margin

JPFA reported a net profit of Rp923bn in 4Q24 (+50% qoq, reversing losses in 4Q23), bringing FY24 net profit to Rp3.0tr (tripled yoy), in line with our estimate (101%) but above consensus (110%) FY24F. Despite a surge in opex in 4Q24 (+27% qoq, +35% yoy), operating profits remained strong (+26% qoq, a sixfold increase from last year’s low base), supported by a higher net gross profit margin of 22.5%. Net gearing further dropped to 56% in 4Q24 from 65% in 3Q24 and 80% in 4Q23, as the company reduced its short-term debt.

Livebird outperformed while feed faced an unusual decline in margin

The qoq net profit increase was mainly driven by livebird operating profits of Rp916bn (from slight losses in 3Q24), supported by higher revenues (+7% qoq) and an improved margin of 13.2% (3Q24: -0.2%) due to a 10% qoq rise in market prices. Feed revenues declined by 2% qoq, while feed OP dropped by half as margins shrank significantly to 3.7% in 4Q24 from 7.9% in 3Q24—an unusual trend in our view given that market corn price only rose by 3% and SBM declined by 10%. Despite a 14% qoq increase in market prices, DOC OPM declined to 14.9% in 4Q24 from 20.4% in the previous quarter.

Revised FY25/26F net profit estimates by +7.2/-1.8%

We have slightly adjusted our FY25/26 forecast, with revised net income estimates for FY25/26F of Rp3.4tr/ Rp3.7tr. We expect a higher margin for FY25F, driven by a higher operating margin in the livebird segment of 10.5% (compared to -3%/6% in FY23/FY24). Additionally, we have revised our FY25 assumption for SBM costs downward by 4.4%, bringing it to US$346/t.

Maintain Buy rating with an unchanged TP of Rp2,800

We maintain our Buy rating with an EV/EBITDA multiple valuation of 6.3x, resulting in an unchanged TP of Rp2,800. Our TP implies an FY25/26F PE multiple of 9.8/8.9x. Risks to our view are slowing demand, a potential spike in feed costs, and uncertainty in government programs.

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