Japfa Comfeed Indonesia (JPFA IJ)

1Q25 Earnings Miss: Decent Margin but Missing Eid Festive Earnings momentum

 

  • JPFA posted net profit of Rp680bn in 1Q25 (-26% qoq, +2% yoy), forming 20% of our and consensus’ FY25F, below in view of Eid season.
  • The lower-than-expected earnings were driven by the weak margin in DOC and broiler business, though partly offset by higher margin in feed.
  • Maintain BUY with a lower TP of Rp2,100 after we adjust our FY25F EBITDA by 18% taking into account the weak 1Q25 Eid festive quarter.

 

Lower operating profit margin coupled with higher effective tax rate

JPFA posted net profit of Rp680bn in 1Q25 (-26% qoq, +2% yoy), forming only 20% of our and consensus FY25F — below expectations. Gross revenue rose modestly by 2% qoq and 2% yoy, but operating profit margin declined to 6.5% (-161bps qoq, -24bps yoy), resulting in operating profit of Rp1.1tr (-22% qoq, flat yoy). Opex was lower qoq (high 4Q24 base) but up 16% yoy, likely due to Eid allowance timing. The effective tax rate rose to 22.7% in 1Q25 (vs. 20.5% in 4Q24 and 20.2% in 1Q24).

 

Feed margin recovered, DOC and broiler business declined

Feed margin rebounded to 7.3% in 1Q25 (from an exceptionally low 3.7% in 4Q24) but remained lower vs. 8.1% in 1Q24, likely due to the lower ASP. Meanwhile, margins in the DOC and broiler segments declined qoq, pressured by lower ASP, although they remained in positive territory. On the other hand, processed food revenue grew by 2% qoq and 22% yoy to Rp2.5tr, but its margin contracted by 109bps qoq to 4.0%.

 

Revised FY25/26F net profit estimates by -25/-26%

We lowered our FY25 livebird ASP assumption from Rp20,602/kg to Rp18,746/kg, taking into account the softer demand during the 2025 Eid festive, while adjusting our SBM cost from US$346/t to US$324/t, reflecting the lower-than-estimated prices YTD. Hence, our FY25/26F EBITDA came in 18/18% lower than our previous estimates.

 

Maintain Buy rating with a lower TP of Rp2,100

We maintain our valuation target multiple unchanged at the 5-year EV/EBITDA average of 6.3x, resulting in a lower TP of Rp2,100 (from Rp2,800 prev.). Our TP implies an undemanding PE valuation of 9.8x FY25F, hence we maintain our BUY rating. Risks to our view are persistent weak purchasing power and government interventions.

 

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