Poultry
Mutant Chickens in Modern Cikande? Investigating the Impact of Cesium-137 Contamination
- News revealed CPIN is among the names affected in Cs-137 contamination. JPFA and MAIN have feedmill plants in the same estate.
- CPIN has stated it has achieved clean-and-clear status and returned normal operation. However, we see risk in consumer perception.
- JPFA and MAIN are less affected given its indirect effect on consumer product. We maintain Overweight given its relatively small impact.
Radioactive Detection Traces Back to Modern Cikande Industrial Estate
The discovery of radioactive exposure in a container of frozen shrimp exported from Indonesia first surfaced when U.S. Customs detected abnormal radiation levels. The United States Food and Drug Administration (FDA) subsequently confirmed the presence of Cesium-137 (Cs-137) in early Aug25 in processed frozen shrimp samples from PT Bahari Makmur Sejati (BMS), and issued an official notification to the Indonesian government. A trace-back investigation by Indonesian authorities later identified the source of contamination in the Cikande area of Banten, where BMS’s processing facility and several metal-smelting plants are located.
Cs-137 Exposure Reports, CPIN Included in the List
Radiation exposure was subsequently identified across several major industrial segments, including metal smelting, hazardous-waste processing, food production, and manufacturing facilities. The Ministry of Industry reported that 24 companies operating within the Modern Cikande Industrial Estate (MCIE) were found to have potential Cs-137 contamination, with CPIN included on this list.
Company-Level Assessment: CPIN Facing a Reputational Overhang
CPIN operates seven food-processing facilities, including one within the MCIE area located approximately 1.3 km from BMS’s plant. Following its inclusion in the list of 24 companies with potential Cs-137 exposure, CPIN clarified that no contamination was detected at any of its facilities and noted that government-led decontamination activities occurred outside the production building, allowing operations to continue normally. That said, we flag a potential short-term reputational overhang given heightened consumer sensitivity to food-safety issues. Meanwhile, JPFA and MAIN also operate within the MCIE area, but their assets consist solely of feedmill facilities. Given the absence of food-processing operations and limited relevance of the reported radiation findings to feed production, we see minimal risk of material operational or reputational impact for both companies at this stage.
Minimal impact to poultry sector, maintain Overweight
While CPIN has acquired clean-an-clear status and has no issue regarding its operation, we see risk that consumer perception regarding its brand, Fiesta and Champ, could deteriorate. However, given the relatively limited impact on profitability, our calculations, which incorporate three downside scenarios for revenue in the food segment (Exhibit 5), suggest that CPIN’s earnings in FY25/26F would decline by approximately 0.3% and 0.5%, respectively. We maintain our Overweight rating and continue to favor CPIN.
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