External broker reports(aggregated public sources), BRI Danareksa Research

BRI Danareksa Research

External broker reports(aggregated public sources)

As a one-stop financial solution with the vision to be the most valuable securities house, BRI Danareksa Sekuritas (BRIDS) has maintained an excellent track record and extensive experience in the capital market as an underwriter, broker, and financial advisor for individual, institutional, foreign and domestic, private and government clients. Established in 1992, PT Danareksa Sekuritas is a securities company that performs activities as a securities broker, underwriter, or arranger and financial advisor.

Thematic (Sector/Industry)

<ul><li>Expect potential recovery in feed margins from lower input costs and stable chicken prices to support earnings growth of 36/34% in FY24/25F.</li><li>The sector’s weighting is still relatively neutral in local funds with negative foreign flows YTD, providing upside to flows and valuation.</li><li>We upgrade the sector to Overweight, with improving feed margins and more stable LT chicken prices as the key catalysts; CPIN is our top pick.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Expect potential recovery in feed margins from lower input costs and stable chicken prices to support earnings growth of 36/34% in FY24/25F.The sector’s weighting is still relatively neutral in local funds with negative foreign flows YTD, providing upside to flows and valuation.We upgrade the sector to Overweight, with improving feed margins and more stable LT chicken prices as the key catalysts; CPIN is our top pick.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Poultry: Brighter Outlook Ahead Despite Seasonal Volatility (OVERWEIGHT)

Equity Bottom-Up

Charoen Pokphand Indonesia / Equity Bottom-Up

<ul><li>CPIN booked 4Q23 net losses of Rp357bn, surpassing 4Q22’s net losses of Rp257bn driven by a lower feed margin and poultry business losses.</li><li>Despite the inline FY23 operating profit, we trim our FY24/FY25F net profit forecasts by -9/-5% on lower other income.</li><li>We downgrade our rating to Hold with a TP of Rp5,200 based on 15.4x FY24F EV/EBITDA (-1SD of 5-year avg), implying 29/21x FY24/FY25F PE.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CPIN booked 4Q23 net losses of Rp357bn, surpassing 4Q22’s net losses of Rp257bn driven by a lower feed margin and poultry business losses.Despite the inline FY23 operating profit, we trim our FY24/FY25F net profit forecasts by -9/-5% on lower other income.We downgrade our rating to Hold with a TP of Rp5,200 based on 15.4x FY24F EV/EBITDA (-1SD of 5-year avg), implying 29/21x FY24/FY25F PE.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Charoen Pokphand Indonesia (CPIN IJ) - FY23 Results: Another Year with a Negative Ending

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>On March 8, <a href="https://www.bloomberg.com/news/articles/2024-03-08/top-asia-poultry-firm-japfa-owners-said-to-mull-go-private-deal?embedded-checkout=true" target="_blank" rel="noopener">Bloomberg reported</a> that <a href="https://www.smartkarma.com/entities/japfa-ltd" target="_blank" data-smartkarma-citation="entities:15597:1" rel="noopener">Japfa Ltd (JAP SP)</a> owners were considering taking it private and started talks about a loan of around US$150 million. </li>
<li>Japfa has faced ongoing profitability issues since 2022 due to cost-of-living pressures. Privatisation interest is unsurprising, as the shares have been down 72% over the last three years. </li>
<li>An attractive premium would be required, irrespective of the offer structure. At a S$0.26 offer (20% premium to last close), Japfa would trade in line with peer multiples.  </li>
</ul>


On March 8, Bloomberg reported that Japfa Ltd (JAP SP) owners were considering taking it private and started talks about a loan of around US$150 million. 
Japfa has faced ongoing profitability issues since 2022 due to cost-of-living pressures. Privatisation interest is unsurprising, as the shares have been down 72% over the last three years. 
An attractive premium would be required, irrespective of the offer structure. At a S$0.26 offer (20% premium to last close), Japfa would trade in line with peer multiples.  


Japfa (JAP SP): Evaluating a Potential Privatisation

<ul><li>Prabowo-Gibran’s team indicated its free lunch program (MSG) would be fully rolled out by FY29F needing 1.2mn tons of chicken p.a.</li><li>We see no clear evidence yet that MSG will bring additional demand, while uncertainty on the program poses downside risk for integrators.</li><li>We maintain the sector’s rating at Neutral, with CPIN (Buy TP of Rp5,200) as our top pick.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Prabowo-Gibran’s team indicated its free lunch program (MSG) would be fully rolled out by FY29F needing 1.2mn tons of chicken p.a.We see no clear evidence yet that MSG will bring additional demand, while uncertainty on the program poses downside risk for integrators.We maintain the sector’s rating at Neutral, with CPIN (Buy TP of Rp5,200) as our top pick.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Poultry - Still Unclear Benefits from the Potential MSG Program on Poultry Demand

<ul><li>We cut our FY23/FY24F earnings estimates for the sector by 34.5/23.2% due to lower-than-expected LB and higher-than-expected corn prices.</li><li>We see downside risks to valuations from potentially soft 4Q23 results, high corn prices, and relatively higher local fund positions.</li><li>We downgrade the sector’s rating to Neutral, with CPIN (Buy, TP of Rp5,200) as our top pick.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We cut our FY23/FY24F earnings estimates for the sector by 34.5/23.2% due to lower-than-expected LB and higher-than-expected corn prices.We see downside risks to valuations from potentially soft 4Q23 results, high corn prices, and relatively higher local fund positions.We downgrade the sector’s rating to Neutral, with CPIN (Buy, TP of Rp5,200) as our top pick.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Poultry: ST Negatives from Earnings, Data and Fund Positioning (NEUTRAL)

Indonesia

PT Charoen Pokphand Indonesia Tbk manufactures and distributes animal feeds, woven plastic bags, and poultry equipment as well as processes chicken.  Through its subsidiaries, the Company also operates poultry farms and distributes its products.

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Poultry: Brighter Outlook Ahead Despite Seasonal Volatility (OVERWEIGHT)

Expect potential recovery in feed margins from lower input costs and stable chicken prices to support earnings growth of 36/34% in FY24/25F.

BRI Danareksa Research

Charoen Pokphand Indonesia (CPIN IJ) - FY23 Results: Another Year with a Negative Ending

CPIN booked 4Q23 net losses of Rp357bn, surpassing 4Q22’s net losses of Rp257bn driven by a lower feed margin and poultry business losses.

BRI Danareksa Research

Japfa (JAP SP): Evaluating a Potential Privatisation

An attractive takeover premium would be required, irrespective of the offer structure. Funding could be an issue due to the high current leverage.

Arun George

Poultry - Still Unclear Benefits from the Potential MSG Program on Poultry Demand

Prabowo-Gibran’s team indicated its free lunch program (MSG) would be fully rolled out by FY29F needing 1.2mn tons of chicken p.a.

BRI Danareksa Research

Poultry: ST Negatives from Earnings, Data and Fund Positioning (NEUTRAL)

We cut our FY23/FY24F earnings estimates for the sector by 34.5/23.2% due to lower-than-expected LB and higher-than-expected corn prices.

BRI Danareksa Research