Contact our analyst Eka
BUY, 21% upside
23rd November 2021
Price Rp 5,925
Target price Rp 7,145
Investment Consideration
Sales Growth maintained
- CPIN sales growth increased a double digit +14% YoY to IDR 12.1 trillion but decreased -7% QoQ. For 9M2021, CPIN recorded sales of IDR 37.59 trillion which is double digit growth of +24% YoY.
- Broiler and Processed Chicken maintained positive growth despite lower broiler and DOC prices in 3Q2021.
- Processed chicken recorded higher growth of 31% YoY to IDR 1.7 trillion, followed by broiler +26% YoY to IDR 6.15 trillion.
- Others segments had negative growth in 3Q2021. DOC sales decreased -18% YoY or -34% QoQ to IDR 408 million. Feed sales decreased -2% YoY to IDR 3.51 trillion.
- The PPKM in June-July caused a significant drop for poultry and broiler prices which fell bellow cost in 3Q2021. But the demand continues to recover in 4Q2021 due to the easing of PPKM to level 1.
- We expect CPIN can maintain double-digit growth in 2021. We are targeting 15.5% YoY growth in 2021F to IDR 49.1 trillion.
3Q2021: Margin Falls
- Despite double-digit sales growth, CPIN recorded a net loss in 3Q2021 of IDR -157 billion after a profit of IDR 1.37 trillion in 2Q2021. The loss in 3Q2021 is due to prices being bellow cost in 3Q2021. The result was a negative NPM of -1.3% from 10.5% in 2Q2021.
- For 9M2021, CPIN recorded a net profit of IDR 2.67 trillion, maintaining double-digit growth of +19% YoY while the net profit margin decreased slightly to 7.1% from 7.4% in 9M2020.
- Cost of sales also increased +28% YoY or +10% QoQ to IDR 11.4 trillion in 3Q2021. The gross profit decreased -60% YoY to IDR 688 billion with a lower gross profit margin of 5.7% from 20.5%.
- CPIN recorded an operating loss of IDR -246 billion from an operating profit of IDR 860 billion in 3Q20202 due to higher operating expenses +9% YoY.
- As the CPIN 3Q2021 performance is lower than estimated, we revise down CPIN’s bottom line for 2021F. We expect CPIN’s profit will reach IDR 4.08 trillion which is 15% growth.
Valuation: TP 7,145, 21% upside
- We are targeting CPIN to trade at a 25x 2022F PE within a year. Target Price is IDR 7,145 which represents 21% upside. We maintain our recommendation to buy.