Research & Stock Picks

Company Reports

24 January 2025

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Poultry: Overweight with JPFA as Top-Pick

Strength

Limited upside for soybean meal prices due to higher-than-average 2025 production growth estimates from Brazilian farmers (+8.2% YoY, vs. 5Y Avg: +1.4% YoY), boosting profit margins; continued low GPS import quota in 2025 (560k) and weekly PS culling to help support DOC and live bird prices

 

Weakness

Given that corn constitutes a large part of the poultry industry’s COGS (41%), readjustment of corn prices to IDR 5,500/kg (+10%, effective 1 February 2025) may pressure the sector’s profitability margins

 

Opportunity

In 2025, the government's free meal program will add 637k tons or +13% higher to Indonesia's total chicken sales volumes of 5,579k tons; this should allow for poultry players to outperform the market this year

 

Threat

Weakened purchasing power may lead to unexciting growth or zero-sum outcome; IDR depreciation may cause higher raw materials resulting in margin squeeze; recent market outperformance by some poultry players could trigger profit-taking from investors

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