Charoen Pokphand Indonesia (CPIN IJ)

Transcription

1 Equity Research Company Update Thursday, 09 November 2017 HOLD Maintain Last price (IDR) 3,250 Target Price (IDR) 3,100 Upside/Downside -4.8% Previous Target Price (IDR) 3,100 Stock Statistics Sector Bloomberg Ticker Poultry CPIN IJ No of Shrs (mn) 16,398 Mkt. Cap (IDR bn/usdmn) 53,130/3,934 Avg. daily T/O (IDR bn/usdmn) 19.5/1.4 Major shareholders PT Central Agromina 55.5% Estimated free float 44.5% EPS Consensus (IDR) 2017F 2018F 2019F Danareksa Consensus Danareksa/Cons CPIN relative to JCI Index Source : Bloomberg Adeline Solaiman (62-21) ext.3503 adeline.solaiman@danareksa.com Charoen Pokphand Indonesia (CPIN IJ) Three salient points from our meeting After meeting the management recently, we note that: 1) CPIN will record growth in volume terms despite lagging ASP, 2) the fifth culling program in 4Q17 will help to achieve price stability but it is not likely to boost ASP significantly, and 3) the management will adopt a corn hedging strategy going forward. HOLD maintained on CPIN with a TP of IDR3,100. Growth in volume terms despite lagging ASP. 9M17 animal feed, DOC, and broiler volumes rose by +6.0% yoy, +6.5% yoy, and % yoy supported by: 1) CPIN s large economies of scale which give it a competitive edge over smaller poultry players, and 2) inorganic growth in the broiler division. Nonetheless, DOC and broiler ASP continued to lag in 9M17 (-1% and -3% yoy, respectively). In F, revenues growth will continue to be driven by volume, we believe, as ASP may lag. The fifth culling program will help to stabilize prices. Supported by the government s efforts to reduce the supply and demand imbalances in the market, we expect more stable DOC and broiler ASP. The fifth culling - which will be conducted on the final stock level hatching eggs from 30 October - 30 December is likely to help stabilize prices in 4Q17, yet not significantly boost ASP. Focus on corn price management. Internally, the management will focus more on its corn price hedging strategy. In this regard, CPIN will utilize its dry corn silos. With better integrated infrastructure than its peers JPFA and MAIN, CPIN is well placed to manage its costs more effectively. The recent increases in corn prices will particularly impact small poultry players, making them less competitive. Against this backdrop (better cost efficiency management and more stable DOC and broiler prices), we expect better gross margins in Maintain HOLD with a TP of IDR3,100. CPIN should benefit from its large economies of scale which will pave the way for volume growth supported by its strategy to hedge corn costs. Since we initiated coverage on the stock recently, the stock price has risen significantly. We maintain our HOLD call on CPIN with a TP of IDR3,100 (assuming 12% WACC and 3% terminal growth). We prefer JPFA as our top pick. The risks to our call include lower-than-expected GDP growth and weak purchasing power. Key Financials Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Revenue, (IDRbn) 29,921 38,257 50,612 56,483 62,848 EBITDA, (IDRbn) 4,032 5,225 4,678 5,747 6,721 EBITDA Growth, (%) (10.5) Net profit (IDRbn) 1,741 2,247 2,576 3,405 4,114 EPS (IDR) EPS growth (%) (0.5) BVPS, (IDR) , ,396.7 DPS, (IDR) PER (x) PBV (x) Dividend yield (%) EV/EBITDA (x) Source : CPIN, Danareksa Estimates See important disclosure at the back of this report 1

2 Exhibit 1. REVENUE AND GROWTH Exhibit 2. NET PROFIT AND GROWTH Exhibit 3. MARGINS Exhibit 4. GEARING LEVEL Exhibit 5. 3Q17 Animal feed volume yoy growth, % Exhibit 6. 3Q17 Animal feed ASP yoy growth, % See important disclosure at the back of this report 2

3 Exhibit 7. 9M17 Animal feed volume yoy growth, % Exhibit 8. 9M17 Animal feed volume yoy growth, % Exhibit 9. 3Q17 DOC volume yoy growth, % Exhibit 10. 3Q17 DOC ASP yoy growth, % Exhibit 11. 9M17 DOC volume yoy growth, % Exhibit 12. 9M17 DOC ASP yoy growth, % See important disclosure at the back of this report 3

4 Exhibit 13. Income Statement Revenue 29,921 38,257 50,612 56,483 62,848 COGS (24,817) (31,743) (44,164) (48,762) (53,930) Gross profit 5,103 6,514 6,448 7,722 8,918 EBITDA 4,032 5,225 4,678 5,747 6,721 Oper. profit 3,346 4,459 3,970 4,956 5,841 Interest income Interest expense (642) (647) (645) (574) (468) Forex Gain/(Loss) (587) Income From Assoc. Co s Other Income (Expenses) 45 (42) Pre-tax profit 2,185 3,984 3,432 4,538 5,481 Income tax (449) (1,732) (858) (1,134) (1,370) Minority interest 4 (5) Net profit 1,741 2,247 2,576 3,405 4,114 Core Net Profit 2,327 2,078 2,544 3,390 4,114 Exhibit 14. Balance Sheet Cash & cash equivalent 1,679 2,504 2,196 1,449 3,384 Receivables 3,340 2,837 3,552 3,671 3,985 Inventory 5,484 5,110 5,690 5,861 5,899 Other Curr. Asset 1,556 1,608 2,163 2,350 2,557 Fixed assets - Net 11,310 11,977 13,530 14,999 16,633 Other non-curr.asset 1, Total asset 24,917 24,205 27,304 28,505 32,638 ST Debt 2,383 2,964 2,735 1,580 1,580 Payables 2,908 1,727 3,017 3,356 3,739 Other Curr. Liabilities Long Term Debt 5,881 3,646 3,812 2,651 2,651 Other LT. Liabilities Total Liabilities 12,130 10,048 10,946 9,156 9,719 Shareholder'sFunds 12,772 14,138 16,340 19,334 22,903 Minority interests Total Equity & Liabilities 24,917 24,205 27,304 28,505 32,638 See important disclosure at the back of this report 4

5 Exhibit 15. Cash Flow Net income 1,741 2,247 2,576 3,405 4,114 Depreciation and Amort Change in Working Capital (149) (304) (5) OtherOper. Cash Flow (281) Operating Cash Flow 2,561 3,706 2,998 4,621 5,292 Capex (2,742) (1,862) (2,024) (2,259) (2,514) Others Inv. Cash Flow 248 1, Investing Cash Flow (2,494) (437) (1,962) (2,123) (2,410) Net change in debt 1,667 (1,654) (284) (2,315) 0 New Capital Dividend payment (277) (483) (355) (412) (545) Other Fin. Cash Flow (759) (280) (705) (518) (402) Financing Cash Flow 631 (2,417) (1,344) (3,245) (946) Net Change in Cash (309) (747) 1,935 Cash - begin of the year 885 1,679 2,504 2,196 1,449 Cash - end of the year 1,679 2,504 2,196 1,449 3,384 Exhibit 16. Key Ratios Year to 31 Dec 2015A 2016A 2017F 2018F 2019F Growth (%) Sales EBITDA (10.5) Operating profit (11.0) Net profit (0.5) Profitability (%) Gross margin EBITDA margin Operating margin Net margin ROAA ROAE Leverage Net Gearing (x) Interest Coverage (x) Source : CPIN, Danareksa Estimates See important disclosure at the back of this report 5