Benefitting from Higher
Chicken Price
Indicated stronger 2Q12 profit. Management indicated
stronger 2Q12 profit of around IDR100b for 2Q12 vs. IDR71b in 1Q12 (QoQ growth
of 41%). Cumulatively, 1H12 net profit will be IDR171b, increasing by 118% YoY
from IDR79b in 1H11. The 1H12 net profit has exceeded our expectation,
representing 60% our FY12F estimate. Higher profit in 2Q12 was supported by: 1)
Higher chicken price (up by 2% QoQ and 23% YoY to IDR17,132/kg on average); and
2) ASP of poultry feed has increased by 10% since 2Q12.
Prices of chicken and DOC surged
to all-time-high. Prices of chicken and DOC have surged by 36% and 73% YTD to
IDR20,900/kg and IDR6500/bird, respectively, for the third week of July, due to
several factors: 1) Anticipation of increased chicken consumption close to the fasting
month in July; 2) Higher ASP of feedmill, up by 5–10% since 2Q12; 3) A switch in meat
consumption from beef to chicken, amidst higher beef prices (up to IDR90k–100k/kg
from IDR65k–70k/kg).
Launching a new processed
chicken business in September 2012.
During
a livestock exhibition in early July, the company promoted its processed
chicken product — chicken nugget under the “SunnyGold” brand — that will be
launched in September 2012. No additional information on this product is
available. We assume the price of chicken nugget to be
around
IDR25,000/kg (price of competitor product: around IDR30,000/kg). Sales volume
should be small (only 900 tonnes) this year, or 10% of total capacity.
Retain BUY, Upping TP to
IDR2,150. We
raise our TP to IDR2,150 from IDR1,750 and our ASP poultry feed assumption by
7% to IDR5,350/kg, as the company increases the ASP of feedmill in 2Q12 and DOC
by 4% to IDR5,000/bird this year due to the surge of DOC price to IDR5,350/kg (average)
in 1H12. Our TP pegs the stock at 11.6x 2012F PER.
Malindo Feedmill– Summary Earnings Table.
FYE Dec (IDR b) 2010A 2011A 2012F 2013F 2014F
Revenue
2,037 2,634 3,182
3,561 4,033
EBITDA
296 383 554
595 650
Recurring
Net Profit 180 201 316 346
412
Recurring
Basic EPS (IDR) 106 118 186
204 243
EPS
growth (%) 161.7
11.9 53.6
9.9 19.1
DPS
(IDR) 25.2
23.0 25.0
37.1 40.8
PER
(x) 14.9
13.3 8.7
7.9 6.6
EV/EBITDA
(x) 10.1 8.8 5.8
5.0 4.4
Div
Yield (%) 0.0%
1.3% 1.6%
2.3% 2.5%
P/BV(x)
10.6
6.4 3.9
2.8 2.1
Net
Gearing (%) 133.2
120.0 69.6
25.3 10.5
ROE
(%) 70.9
48.2 45.2
35.3 31.2
ROA
(%) 18.9
15.4 18.7
17.3 19.3
Consensus
Net Profit (IDR b) 270.8 332.7 363
Source:
Kim Eng
Indicated stronger 2Q12 profit
Management
indicated stronger 2Q12 profit of around IDR100b for 2Q12 vs. IDR71b in 1Q12
(QoQ growth of 41%). Cumulatively, 1H12 net profit will be IDR171b, increasing
by 118% YoY from IDR79b in 1H11. The 1H12 net profit has exceeded our
expectation, representing 60% our FY12F estimate. Higher profit in 2Q12 was
supported by: 1) Higher chicken price (up by 2% QoQ and 23% YoY to IDR17,132/kg
on average); and 2) ASP of poultry feed has increased by 10% since 2Q12.
Previously,
we had estimated that the ASP of poultry feed would be flat this year at
IDR5,000/kg amidst lower raw material costs since mid-last year. However, corn
price started to rise end-June and has continued to increase to USD7.9 per
bushel in July (the highest level since June 2011). Hence,
the
company may have to increase its ASP.
Chicken and DOC prices surged to all-time-high
Prices of
chicken and DOC surged by 36% and 73% YTD to IDR20,900/kgand IDR,6500/bird in
the third week of July, due to several factors: ) Anticipation of increased
chicken consumption close to the fasting month in July; 2) Higher ASP of
feedmill, up by 5–10% since 2Q12; 3) A switch in meat consumption from beef to chicken, amidst
higher beef prices (up to IDR90k–100k/kg from IDR65k–70k/kg). However, historically, prices of
chicken and DOC tend to decline after the Eid-Fitr festivity. Yet, in our view,
chicken and DOC prices will not go below their respective Break-Even-Point
prices of IDR16,400/kg and IDR2,600/bird.
We expect
the average chicken and DOC prices to stay at around IDR17,000/kg and
IDR5,000/kg, respectively, for 2H12, as we do not anticipate an oversupply of
chicken and DOC. Chicken consumption will increase again in 4Q12 due to
festivities in 4Q12 such as Eid-Al-Adha, Christmas, and New Year.
Source: KIMENG dated 24 July 2012
