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>The NFA issued a new regulation to increase the reference prices of livebirds and local corn, effective from Jun24 until amendment.</li><li>Although we view this positively, we only expect a minimum impact from reference prices on actual market prices. </li><li>We maintain our Overweight rating on the sector, foreseeing higher feed margins; CPIN remains 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.

The NFA issued a new regulation to increase the reference prices of livebirds and local corn, effective from Jun24 until amendment.Although we view this positively, we only expect a minimum impact from reference prices on actual market prices. We maintain our Overweight rating on the sector, foreseeing higher feed margins; CPIN remains 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: New Reference Prices to Support the Industry, Albeit Unlikely to Be a Game Changer

<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

<ul><li>Core net profits recorded 5-fold growth to Rp149bn in FY23, beating our forecast, supported by feed business margin expansion.</li><li>We continue to expect a slight improvement in the feed margin in FY24F from normalization of weather post El-Nino in FY23. </li><li>Maintain Buy rating with a higher TP of Rp750 (from Rp650 prev.) on its attractive earnings growth prospects and undemanding valuation.</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.

Core net profits recorded 5-fold growth to Rp149bn in FY23, beating our forecast, supported by feed business margin expansion.We continue to expect a slight improvement in the feed margin in FY24F from normalization of weather post El-Nino in FY23. Maintain Buy rating with a higher TP of Rp750 (from Rp650 prev.) on its attractive earnings growth prospects and undemanding valuation.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.

Malindo Feedmill Indonesia  - Feed Business Remains the Backbone of Earnings

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

Indonesia

PT Malindo Feedmill Tbk produces animal feeds and breeds commercial day-old chicks.

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Malindo Feedmill (MAIN IJ)

Poultry: New Reference Prices to Support the Industry, Albeit Unlikely to Be a Game Changer

The NFA issued a new regulation to increase the reference prices of livebirds and local corn, effective from Jun24 until amendment.

BRI Danareksa Research

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

Malindo Feedmill Indonesia - Feed Business Remains the Backbone of Earnings

Core net profits recorded 5-fold growth to Rp149bn in FY23, beating our forecast, supported by feed business margin expansion. We continue to...

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

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