Charoen Pokphand Indonesia (CPIN.IJ Rp4.010; BUY TP Rp5,900) 1Q26 Earnings Beat on Resilient Feed Margin and Contained Operating Costs

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Charoen Pokphand Indonesia (CPIN IJ)

1Q26 Earnings Beat on Resilient Feed Margin and Contained Operating Costs

CPIN booked net profit of Rp2.6tr in 1Q26 (+13% qoq, +68% yoy), forming 41% of our and 50% of consensus estimates.
We believe the solid earnings were supported by 4Q25’s inventory build-up, which was used in 1Q26, supporting feed margin.
Maintain Buy rating with a TP of Rp5,900 with solid earnings and the low local fund position providing ST upside potential.

Record high quarterly earnings with strong operating performance

After 4Q25’s record high quarterly earnings, CPIN booked an even higher net profit of Rp2.6tr in 1Q26 (+13% qoq, +68% yoy), forming 41% of our and 50% of consensus estimates, i.e., above expectations. The strong earnings were supported by solid operating performance and margin expansion across most segments. Gross revenue stood at Rp33.3tr (flat qoq, +6% yoy), supported by stable demand and relatively firm ASP across key segments. Gross operating margin came in at 10.5% (–24bps qoq, +364bps yoy), as lower DOC and broiler margins weighed slightly qoq, but overall profitability improved yoy amid higher raw material costs.

Resilient feed margin amid higher input costs

Feed revenue grew 1% qoq and 8% yoy, with margin improving qoq to 7.3% (+29bps qoq) but still lower yoy (–55bps yoy). We believe the feed inventory build-up, particularly corn substitutes from 4Q25, began to be utilized in 1Q26, helping cushion higher corn and SBM prices. DOC remained strong with revenue up 31% yoy (+3% qoq) and margin at 12.5%, albeit normalizing from a high base. Livebird revenue grew 5% yoy (+1% qoq) with margin at 14.3%, still robust yoy but moderating qoq due to higher input costs. Processed food continued its recovery, with stable revenue and margin improving to 15.6% (+579bps qoq, +469bps yoy).

Strong cash bringing 1Q26 to net cash position

In 1Q26, inventory dropped by 2% qoq, partly driven by lower goods in transit, which declined 30% as they arrived and were utilized during the quarter. Despite flat borrowings, the strong cash balance in 1Q26 brought CPIN into a net cash position, the first since 2012.

Maintain Buy rating and TP of Rp5,900

Despite solid earnings, we maintain our FY26F est. as we foresee normalized earnings post Eid seasonality and potential persistently high raw material costs. We maintain Buy rating with an unchanged TP of Rp5,900, based on revised FY26F EBITDA and an EV/EBITDA multiple of 10.2x (-1SD of the 5-year avg.), implying 15x FY26F PE. Risks to our view include foreign outflows and MBG discontinuation. Tactical (3M) view: OW. Low local fund position, strong 1Q26 earnings, and favorable LB prices should provide positive sentiment.

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