Malindo Feedmill Indonesia (MAIN IJ)

1Q25 Earnings Miss: Dragged Down by Weak DOC and Livebird Prices Despite Higher Feed Margin qoq

 

  • MAIN posted net profit of Rp63bn in 1Q25 (-51% qoq, -28% yoy), forming 13% of our FY25F, underperforming due to margin compression
  • Feed margin improved in 1Q25, but weak performance in DOC, broiler, and processed food segments dampened overall results.
  • Maintain BUY with a lower TP of Rp1,500, following a 32% downward adjustment to our FY25F EBITDA due to the weak 1Q25 performance.

 

MAIN 1Q25 earnings below expectation amid margin compression

MAIN reported net profit of Rp63bn in 1Q25 (-51% qoq, -28% yoy), forming only 13% of our FY25F — well below expectations. Gross revenue rose 3% qoq but fell 1% yoy. Operating profit margin declined to 2.4% (-292bps qoq, -127bps yoy), leading to operating profit of Rp159bn (-7% qoq, -32% yoy). Opex declined qoq (due to a high 4Q24 base) but rose 11% yoy, likely from Eid allowance timing.

 

Feed margin improvement dampened by weak DOC and Broiler segments

Feed margin improved to 7.1% in 1Q25 (from 6.5% in 4Q24) but was still below 8.6% in 1Q24. The performance in DOC and broiler segments was a drag, as margins declined despite the Eid festive period, with DOC margins turning negative and broiler margins barely making money at 0.2%. Additionally, processed food revenue fell 5% qoq (+19% yoy), and while the margin improved, it remained in the red at -14.9% operating margin.

 

We revised FY25F EBITDA and NP by 32% and 24%

Due to softer demand during the 2025 Eid festive period, we have revised our FY25 estimates for DOC and livebird ASP, lowering them from Rp6,716/chick and Rp20,351/kg to Rp6,234/chick and Rp18,383/kg. In addition, our SBM cost assumption has been adjusted downward from US$362/t to US$324/t, reflecting the lower-than-expected prices observed year-to-date. Consequently, our FY25/26F EBITDA forecasts are now 32/35% below previous expectations.

 

Maintain Buy rating with a lower TP of Rp1,500

Despite the weak results and lower FY25F earnings, we maintain Buy rating on MAIN, given its cheap valuation of 5x FY25 PE ratio, potential c. 8% dividend yield, and buyback program. Our TP is derived from -0.5SD EV/EBITDA of 4.8x, pricing in its low liquidity and implying 9.5x FY25F PE. Risks to our view are persistent weak purchasing power and government interventions.

 

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