Contact our analyst Eka
BUY, 20% upside
11th June 2021
Price Rp 7,000
Target price Rp 8,400
Investment Consideration
Negative sales in 4Q2020
- CPIN recorded negative sales in 4Q2020 of IDR -766 billion while for 2020FY sales slightly increased +0.04% YoY to IDR 42.5 trillion.
- Broiler and Processed chicken recorded positive sales of IDR 5.85 trillion and IDR 1.4 trillion in 4Q2020.
- For 2020FY, CPIN maintained positive-growth for broiler and processed chicken sales. Broiler contributed the most with IDR 19.03 trillion which is growth of 10% YoY and a 45% contribution to total sales, followed by Feed with a 33% contribution or IDR 14.2 trillion, down -11% YoY. Processed chicken grew +15% YoY to IDR 5.6 trillion. DOC dropped -22% YoY to IDR 2.16 trillion.
- As the price has started to recover from early 2021 with stronger sales of broiler and DOC, we expect positive sales growth in 2021.
Higher Margins in 2020
- CPIN net profit was IDR 1.6 trillion in 4Q2020, up +45% YoY, despite the negative sales as the cost of sales turned positive IDR 3.72 trillion in 4Q2020.
- For 2020FY, CPIN still recorded positive growth of net profit +5% YoY to IDR 3.8 trillion and the net profit margin slightly increased to 9% from 8.6%.
- Cost of sales slightly decreased by -0.7% YoY to IDR 34.2 trillion and gross profit increased +4% YoY to IDR 8.25 trillion with a higher gross profit margin of 19.4% from 18.8%.
- Operating profit grew +4% YoY to IDR 5.14 trillion in line with a higher operating profit margin, of 12.1% from 11.6%.
- The positive sentiment from government supply adjustments has significantly improved prices since early 2021.
- We are expecting stable margins in 2021, and we expect CPIN’s sales to reach IDR 47.4 trillion with net profit of IDR 4.2 trillion.
Valuation: TP 8,400, 20% upside
- We are targeting CPIN to trade at a 31x 2022F PE within a year. Target Price is IDR 8,400 which represents 20% upside. Our recommendation is BUY.