Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.<ul><li><a href='#lucror-entity-8258'>Japfa Comfeed Indonesia</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.Japfa Comfeed Indonesia

Morning Views Asia: Japfa Comfeed Indonesia

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.

Equity Bottom-Up

Japfa Comfeed Indonesia / Equity Bottom-Up

<ul><li>Lower ASP across poultry businesses dragged down 4Q23 profitability, resulting in DOC and livebird segment operating losses in 4Q23.</li><li>The current oversupply and high local corn prices may pressure 1Q24 earnings, potentially offset by higher LB prices during Ramadan. </li><li>We maintain our Hold rating with a TP of Rp1,100 based on FY24F EV/EBITDA, implying 11x FY24F 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.

Lower ASP across poultry businesses dragged down 4Q23 profitability, resulting in DOC and livebird segment operating losses in 4Q23.The current oversupply and high local corn prices may pressure 1Q24 earnings, potentially offset by higher LB prices during Ramadan. We maintain our Hold rating with a TP of Rp1,100 based on FY24F EV/EBITDA, implying 11x FY24F 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.

Japfa Comfeed Indonesia (JPFA IJ) - Soft Livebird and DOC Prices Dragged Down 4Q23 Earnings

<ul><li>We raise our FY24F EBITDA forecast by 10% to IDR4.8tr to take into account the lower feed costs in 3Q23.</li><li>Based on our revised forecast, we now expect higher net revenues in FY24F (+7.6% y-o-y) with a sustained EBITDA margin on the back of lower feed raw material costs.</li><li>We maintain our BUY rating on the stock with a higher EV/EBITDA based TP of IDR1,800.</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 raise our FY24F EBITDA forecast by 10% to IDR4.8tr to take into account the lower feed costs in 3Q23.Based on our revised forecast, we now expect higher net revenues in FY24F (+7.6% y-o-y) with a sustained EBITDA margin on the back of lower feed raw material costs.We maintain our BUY rating on the stock with a higher EV/EBITDA based TP of IDR1,800.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.

Japfa Comfeed Indonesia - Expect the Feed Business to Further Drive Profitability

Trung Nguyen

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We view Japfa Comfeed's ESG as "Adequate", in line with its Environmental, Social and Governance scores. Controversies are "Immaterial" and Disclosure is "Strong".

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).  We view Japfa Comfeed's ESG as "Adequate", in line with its Environmental, Social and Governance scores. Controversies are "Immaterial" and Disclosure is "Strong". 

Japfa Comfeed - ESG Report - Lucror Analytics

Japfa Comfeed's H1/23 results remained weak, with a large drop in profitability on account of an oversupply of poultry, higher raw-material costs and lower consumer demand. While there was sequential improvement in Q2, the overall H1 results remained significantly weaker y-o-y. The company's financial risk profile continued to deteriorate, while liquidity worsened. We revise our LARA on Japfa to "High Risk" from "Medium Risk", given the company's quickly deteriorating liquidity profile and increasing leverage. The inadequate liquidity position and fast-rising leverage are no longer in line with that of a "Medium Risk" credit.

  Japfa Comfeed's H1/23 results remained weak, with a large drop in profitability on account of an oversupply of poultry, higher raw-material costs and lower consumer demand. While there was sequential improvement in Q2, the overall H1 results remained significantly weaker y-o-y. The company's financial risk profile continued to deteriorate, while liquidity worsened.   We revise our LARA on Japfa to "High Risk" from "Medium Risk", given the company's quickly deteriorating liquidity profile and increasing leverage. The inadequate liquidity position and fast-rising leverage are no longer in line with that of a "Medium Risk" credit.  

Japfa Comfeed - Earnings Flash - H1 FY 2023 Results - Lucror Analytics

Indonesia

PT Japfa Comfeed Indonesia Tbk manufactures animal feed, breeds and processes chickens, and operates aquaculture farms.  The Company trades its products domestically and internationally.

Japfa Comfeed Indonesia (JPFA IJ)

Morning Views Asia: Japfa Comfeed Indonesia

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics