FOCUS Charoen Pokphand Company Update 03 November 2014

Transcription

1 FOCUS XXX Company Update XX XXXXX 213 FOCUS Charoen Pokphand Company Update 3 November 214 Mandiri Sekuritas Analyst Herman Koeswanto, CFA herman.koeswanto@mandirisek.co.id Sector : Poultry BUY Current Price Rp4,2 Price Target Rp6, (+42.9%) 52-wk range Rp4,5 - Rp3,1 Stock Data Bloomberg Code CPIN IJ Mkt.Cap (Rp bn/us$ mn) 68,976 / 5,78 Issued Shares (mn) 16,423 Avg. Daily T/O (Rp bn/us$ mn) 28./2.3 Major shareholder PT Central Agroprima 55.5% Public 44.5% EPS consensus Mansek Cons Diff 214F (19.6) 215F (6.8) 216F (3.6) Share price performance 3m 6m 12m Absolute (%) Relative to JCI (%) (5.1) Still Leading despite Tactical Move CPIN reported 9M14 results within our expectation (72%) but below consensus (55%), the strongest in the industry. Given its aggressive strongest feed and processed chicken sales amid declining raw material costs, CPIN s higher market share would offer higher upside earnings growth potential in the coming future. CPIN remains our top pick and we maintain our Buy rating 9M14 results within our expectation. CPIN booked 9M14 NPAT of Rp1,712bn (- 22%YoY), below consensus (55%) but inline with ours (72%), the strongest among peers. We had expected weak NPAT of Rp461bn (-34%YoY, -22%QoQ) mainly due to i) aggressive strategy in flushing the market to grab more market share with 4-5% lower price ii)seasonally weaker DOC price post Lebaran and entering Muharam month. Hence, CPIN booked lower EBIT margin at 8% in vs 12.5% in 2Q14 Feed bundled with DOC: flushing the old inventory to enjoy stronger margin? Based on our ground channel check, CPIN has been aggressively flushing out its high cost old inventories in July-August 214 amid declining raw material costs. Despite of its lower sales, CPIN was still able to book higher feed margin in at 15.2% vs 12.4% in 2Q14 DOC: weak season and at loss. On the other hand, on DOC, which is now popularly sold bundled with feed sales, it seems that CPIN has sacrificed its profitability to push its feed sales which in turn will flush out the old inventory during the weak season post Lebaran. CPIN booked net operating loss with -49% EBIT margin, significantly lower vs 13.9% in 2Q14. Processed chicken: still growing strongly. CPIN booked robust 9M14 processed chicken sales of Rp2,128bn (+24.4%) with sales of Rp815bn (+25.8%YoY, +19.2%QoQ). It witnessed slight margin recovery in with EBIT margin of 14.7% vs 14.2% in 2Q14 Maintain Buy and TP unchanged at Rp6,. We maintain our Buy rating and TP unchanged at Rp6, on CPIN as our top pick in the industry. We believe higher market share would offer CPIN to monetize in coming future, which would offer potential upside risk. CPIN would remain the proxy of our sector call as the market leader underpinned by its high earnings quality and effective business strategy Key risks. 1.) Lower than expected chicken prices, 2.) IDR currency volatility, 3.) regulatory risk and 5.) bird flu polemic FINANCIAL SUMMARY YE Dec (Rp Bn) 212A 213A 214F 215F 216F EBITDA 3,628 4,521 3,74 5,161 6,148 Net Profit 2,678 2,531 2,424 3,548 4,425 Fully-diluted EPS (Rp) Fully-diluted EPS growth (%) 13.7 (5.5) (4.2) P/E Ratio (x) EV/EBITDA (x) P/B Ratio (x) Dividend Yield (%) ROAE (%) Source: Company ( ), Mandiri Sekuritas ( ) Please see important disclosure at the back of this report Page 1 of 5

2 Company Update 3 November 214 CPIN - At a Glance FIGURE 1. SALES BREAKDOWN Broiler 1% Processed Chicken % FIGURE 2. GROSS PROFIT BREAKDOWN Broiler 4% Processed Chicken % DOC 19% DOC 39% Feedmill 57% Feedmill 71% FIGURE 3. MARKET SHARES AS OF 212 MAIN 6% Cheil Jeddang 7% Others 31% JPFA 19% CPIN 37% FIGURE 4. PROFITABILITY COMPARISONS VERSUS PEERS 18.% 16.6% 16.% 16.% 15.2% 14.% 13.4% 12.2% 12.% 1.% 9.4% 8.4% 9.% 8.% 7.1% 6.% 4.% 2.%.% CPIN JPFA MAIN FIGURE 5. EPS GROWTH TREND FIGURE 6. LEVERAGE TREND (Rp) (%) (1) (%) (5) (x) Dec-7 Dec-8 Dec-9 Dec-1 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-7 Dec-8 Dec-9 Dec-1 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 EPS EPS Growth [RHS] Net Debt/Equity (NDE) Interest Cover [RHS] Please see important disclosure at the back of this report Page 2 of 5

3 Company Update 3 November 214 FIGURE 7. CPIN FEED AND PROCESSED CHICKEN SALES GROWTH REMAIN STRONG IN FIGURE 8. QUARTERLY FEED VS DOC ASP 7, 6, 5, 4, 3, 2, 1, 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 Feed (Rp/kg) DOC (chick) FIGURE 9. CPIN CONSOLIDATED GROSS & EBIT MARGIN 3.% FIGURE 1. QUARTERLY EBIT MARGIN PER SEGMENT 35.% 1.% 25.% 2.% 15.% 3.% 25.% 2.% 5.%.% 1.% 15.% 5.% 5.%.% 1Q7 3Q7 1Q8 3Q8 1Q9 3Q9 1Q1 3Q1 Gross margin EBIT margin 1.% 5.%.% 1Q7 3Q7 1Q8 3Q8 1Q9 3Q9 1Q1 3Q1 Feed Processed food DOC (RHS) 1.% 15.% FIGURE 11. CPIN 9M14 RESULTS CPIN 9M14 Results Rp bn 9M14 9M13 %YoY %YoY 2Q14 %QoQ FY14 Cons. % of Cons. FY14F Mansek % of Mansek Revenue 21,783 18,684 17% 7,358 6,699 1% 7,75 4.5% 29,115 75% 27,797 78% COGS (18,394) (14,666) 25% (6,47) (5,171) 24% (6,398).1% (23,35) 79% (22,825) 81% Gross profit 3,389 4,18 16% 951 1,528 38% 1, % 5,765 59% 4,972 68% Opex (1,9) (81) 26% (362) (37) 18% (343) 5.6% (1,592) 63% (1,699) 59% EBIT 2,38 3,217 26% 589 1,221 52% % 4,173 57% 3,273 73% NPAT 1,712 2,28 22% % % 3,1 55% 2,423 71% Gross margin 15.6% 21.5% 12.9% 22.8% 17.% 19.8% 17.9% EBIT margin 1.9% 17.2% 8.% 18.2% 12.5% 14.3% 11.8% Net margin 7.9% 11.8% 6.3% 1.4% 7.7% 1.6% 8.7% Sales: Feed 16,42 13, % 5,626 4, % 5, % DOC 2,735 3, % 736 1, % 1, % Processed chicken 2,128 1, % % % EBIT margin: Feed 13.1% 15.9% 15.2% 16.8% 12.4% DOC 2.7% 25.4% 49.% 29.% 13.9% Processed chicken 16.% 19.5% 14.7% 18.% 14.2%, Bloomberg Please see important disclosure at the back of this report Page 3 of 5

4 Company Update 3 November 214 Charoen Pokphand Profit & Loss YE Dec (Rp Bn) 212A 213A 214F 215F 216F Revenue 21,311 25,661 27,797 3,856 33,899 Gross Profit 4,492 5,148 4,971 6,518 7,741 Oper. Profit 3,41 3,92 3,274 4,667 5,654 EBITDA 3,628 4,521 3,74 5,161 6,148 Net Interest (82) (127) (63) (54) 1 Interest Expense (12) (148) (163) (159) (85) Interest Income Forex Losses/Gains (44) (437) Net Other (1) Pre-Tax Profit 3,376 3,451 3,111 4,613 5,754 Income Tax (696) (923) (684) (1,61) (1,323) Others Minority Interests Net Profit 2,678 2,531 2,424 3,548 4,425 Cash Flow YE Dec (Rp Bn) 212A 213A 214F 215F 216F Operating Profit 3,41 3,92 3,274 4,667 5,654 Net Interest (82) (127) (63) (54) 1 Depr & Amort Other Gain / Loss Tax (696) (923) (684) (1,61) (1,323) Chg in Working Capital (234) (96) (351) (25) (182) Other Oper. Cash Flow 6 Oper. Cash Flow 2,723 3,49 2,542 3,84 4,743 Capital Expenditure (1,622) (2,415) (1,815) (1,925) (1,925) FCF (OPCF after Capex) 1,12 1, ,915 2,818 Other Investing CF (1,563) (616) (337) (482) (48) CF From Investing (3,184) (3,31) (2,152) (2,47) (2,45) Net Chg in Debts (79) (1,461) Equity Funds Raised Dividend (688) (754) (713) (683) (999) Other Financing CF 376 (29) 9 (8) (11) CF From Financing (43) (77) (2,471) Non-Recur. Inc (Exp) (44) (437) Extraord. Inc(Exp) Net Change in Cash (12) 663 (133) Cash at beginning ,147 1,135 1,798 Cash at End 954 1,147 1,134 1,798 1,665 Valuation YE Dec 212A 213A 214F 215F 216F Balance Sheet YE Dec (Rp Bn) 212A 213A 214F 215F 216F Cash & ST Investment 955 1,147 1,135 1,798 1,665 Acct. Receivable 1,767 2,53 2,711 3,1 3,37 Inventory 3,366 4,44 4,381 4,863 5,342 Others 1,93 1,131 1,141 1,154 1,168 Current Assets 7,181 8,825 9,368 1,825 11,482 Investments Fixed Assets 4,593 6,389 7,738 9,169 1,6 Others 6,752 9,11 1,916 12,841 14,766 Total Assets 12,349 15,723 17,614 2,53 22,591 Curr. Liabilities 2,156 2,32 3,572 3,648 3,212 Acct. Payable 1,24 1,743 1,61 1,717 1,845 ST Borrowings ,59 1, Others Long-Term Liabilities Long-Term Payable 1,3 2,768 1,684 1, Others Total Liabilities 4,178 5,771 5,939 5,967 4,634 Shareholder s Equity 8,171 9,951 11,675 14,536 17,957 Key Ratios YE Dec 212A 213A 214F 215F 216F Growth (% YoY) Sales EBIT (16.1) EBITDA (17.3) Net Profit 13.7 (5.5) (4.2) Profitability (%) Gross Profit Margin Oper. Margin EBITDA Margin Net Margin ROAA ROAE Leverage Net Debt / Equity (%) (.1) EBITDA/Gross Int. (x) Per Share Data (Rp) EPS CFPS BVPS ,93 DPS PER (x) EV/EBITDA (x) P/BV (x) P/CF (x) Dividend Yield (%) Please see important disclosure at the back of this report Page 4 of 5

5 Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk Plaza Mandiri 28 th Floor, Jl. Jend. Gatot Subroto Kav , Jakarta 1219, Indonesia General: , Fax : (Equity Research), (Equity Sales) RESEARCH John Rachmat Head of Equity Research, Strategy john.rachmat@mandirisek.co.id Tjandra Lienandjaja Banking tjandra.lienandjaja@mandirisek.co.id Handoko Wijoyo Construction, Toll Road handoko.wijoyo@mandirisek.co.id Hariyanto Wijaya, CFA, CFP, CPA Plantation, Heavy eq., Energy hariyanto.wijaya@mandirisek.co.id Herman Koeswanto, CFA Consumer, Poultry herman.koeswanto@mandirisek.co.id Liliana S Bambang Property, Building Material liliana.bambang@mandirisek.co.id Ariyanto Kurniawan Telecom, Coal & Metal Mining ariyanto.kurniawan@mandirisek.co.id Matthew Wibowo Retail matthew.wibowo@mandirisek.co.id Rizky Hidayat Property, Media rizky.hidayat@mandirisek.co.id Vanessa Ariati Tanuwijaya Banking, Health Care vanessa.tanuwijaya@mandirisek.co.id Aldian Taloputra Economist aldian.taloputra@mandirisek.co.id Leo Putra Rinaldy Economist leo.rinaldy@mandirisek.co.id Aditya Sastrawinata Research Assistant aditya.sastrawinata@mandirisek.co.id Wisnu Trihatmojo Research Assistant wisnu.trihatmojo@mandirisek.co.id Yudha Gautama Research Assistant yudha.gautama@mandirisek.co.id INSTITUTIONAL SALES Lokman Lie Co-Head Institutional Equities lokman.lie@mandirisek.co.id Silva Halim Co-Head Institutional Equities silva.halim@mandirisek.co.id Andrew Handaya Institutional Sales andrew.handaya@mandirisek.co.id Cindy Amelia P. Kalangie Institutional Sales cindy.amelia@mandirisek.co.id Jane Theodoven Sukardi Institutional Sales jane.sukardi@mandirisek.co.id Janefer Amanda Soelaiman Institutional Sales janefer.soelaiman@mandirisek.co.id Karmia Tandjung-Nasution Institutional Sales karmia.tandjung@mandirisek.co.id Mirna Santikara Salim Institutional Sales santikara.salim@mandirisek.co.id Oos Rosadi Institutional Sales oos.rosadi@mandirisek.co.id Vera Ongyono Institutional Sales vera.ongyono@mandirisek.co.id Yohan Setio, CFA Institutional Sales yohan.setio@mandirisek.co.id Zahra Aldila Niode Institutional Sales zahra.niode@mandirisek.co.id Kusnadi Widjaja Equity Dealing kusnadi.widjaja@mandirisek.co.id Edwin Pradana Setiadi Equity Dealing edwin.setiadi@mandirisek.co.id RETAIL SALES Ridwan Pranata Head Retail Equities ridwan.pranata@mandirisek.co.id Boy Triyono Jakarta Branch boy.triyono@mandirisek.co.id Yohanes Triyanto Kelapa Gading Branch yohanes.triyanto@mandirisek.co.id Hendra Riady Mangga Dua Branch hendra.riady@mandirisek.co.id Umar Abdullah Pondok Indah Branch umar.abdullah@mandirisek.co.id Indra Mas ari Bandung Branch indra.mas ari@mandirisek.co.id Yuri Ariadi Pontianak Branch yuri.ariadi@mandirisek.co.id Ruwie Medan Branch ruwie@mandirisek.co.id INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12-month period from the date of the last published report, are: Buy (1% or higher), Neutral (-1% to1%) and Sell (-1% or lower). DISCLAIMER: This report is issued by PT. Mandiri Sekuritas, a member of the Indonesia Stock Exchanges (IDX). Although the contents of this document may represent the opinion of PT. Mandiri Sekuritas, deriving its judgement from materials and sources believed to be reliable, PT. Mandiri Sekuritas or any other company in the Mandiri Group cannot guarantee its accuracy and completeness. PT. Mandiri Sekuritas or any other company in the Mandiri Group may be involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Mandiri Sekuritas or any other company in the Mandiri Group may seek or will seek investment banking or other business relationships with the companies in this report. For further information please contact our number or fax ANALYSTS CERTIFICATION: Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her views about the companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of his or her compensation.