Japfa Comfeed Indonesia (JPFA IJ)

2Q25 Earnings Beat: Resilient Margin Amid Industry Soft Pricing

 

  • JPFA delivered 2Q25 net profit of Rp556bn, beating our estimates, due to the unexpected qoq margin expansion offsetting topline pressure.
  • Margin remained resilient across key segments, led by feed margin expansion and broiler’s positive margin.
  • We maintain our forecast and Buy rating with a TP of Rp2,100, implying 10x FY25F PE.

 

JPFA 2Q25: Strong Earnings Beat Despite Revenue Contraction

JPFA booked a strong earnings beat in 2Q25 with net profit of Rp556bn (–18% qoq, –32% yoy), well above our base-case estimate of Rp131bn. This brought 1H25 net profit to Rp1.2tr, achieving 49% of our FY25F and 41% of consensus, broadly in line. Despite the earnings outperformance, gross revenue declined 9% qoq (–5% yoy) to Rp20.2tr, with double-digit contractions across all business segments. Meanwhile, operating expenses rose 2% qoq and 19% yoy, despite softer revenues.

 

2Q25 Margin Stability Offsets Soft Topline

JPFA maintained resilient margins in 2Q25, with consolidated gross operating margin slightly improving to 6.6% (+14bps qoq), despite weaker prices and topline contraction, although still below the high base in 2Q24 (8.6%). The feed segment remained a key margin contributor, with revenue down 9% qoq (–1% yoy), but operating margin expanded to 9.6% (vs. 7.3% in 1Q25 and 8.5% in 2Q24), supported by favorable raw material costs and better cost efficiency.

 

Broiler Margin Expands; Processed Food Stays Profitable

The DOC segment saw revenue decline 18% qoq (–28% yoy), with operating profit nearly breakeven despite ongoing price pressure. Meanwhile, the broiler segment delivered improved profitability, with OPM rising to 4.7% (from 3.8% in 1Q25), amid weak LB prices. The processed food segment also remained profitable, posting an OPM of 3.3%, despite a 5% qoq revenue decline, with sales still up 13% yoy.

 

Maintain Buy rating with a TP of Rp2,100

We maintain our FY25-27F est. and valuation unchanged, and hence maintain our TP at Rp2,100 and Buy rating. Our TP is derived from 5-year EV EBITDA average of 6.3x to FY25F, implying 10x PE. Risks to our view are further weakening purchasing power, supply disruption in raw materials, and government interventions.

 

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